Reference no: EM132599339
The following balances were extracted from the books of Bashara Kabwa Enterprises, a wholesale business, as at 31 October 2018:
Drawings 660,000
Trade receivables 990,000
Purchases 2,303,840
Sales returns 79,420
Capital 4,101,100
Trade payables 330,000
Sales 4,691,280
Purchases returns 120,340
Discount received 93,720
Provision for depreciation: Motor vehicles 176,000
Fixtures and fittings 63,800
Allowances for doubtful debts 44,000
15% bank loan 220,000
Salaries and wage 1,034,000
Discount allowed 54,560
Bank balance 568,260
Cash in hand 26,400
Electricity expenses 103,840
Rent and rates 54,560
Freehold premises (cost) 1,569,700
Fixtures and fittings (cost) 334,400
Motor vehicles (cost) 462,000
Stationery 34,320
Postage and telephone expenses 44,000
Insurance premiums 13,200
Bad debts written off 15,840
Motor vehicle expenses 84,920
Inventory (1 November 2017) 1,393,480
Interest on bank loan 16,500
Additional information:
The value of inventory as at 31 October 2018 was Sh. 1,036,400
Sales includes Sh. 300,000 worth of goods sold by Bashara Kabwa Enterprises agents, who are allowed 15% commission on such sales. This transaction has not been recorded in the books.
Fixtures and fittings - 10% per annum on reducing balance basis.
Fixtures and fittings - 10% per annum on reducing balance basis.
Motor vehicle - 15% per annum on straight line basis.
Annual insurance premium amounted to Sh. 12,000.
As at 31 October 2017, there was a balance of Sh. 65,000 received from a customer in cash.
Salaries and wages were in arrears of Sh. 35,000
The Electricity bill for the month of October of Sh. 14,500 was received on 5 November 2018.
An allowance of 5% is to be maintained for doubtful debts.
Goods worth Sh. 48,840 had been distributed to potential customers as free samples.
Required:
Problem 1: Income statement for the year ended 31 October 2018
Problem 2: Statement of Financial position as at 31 October 2018