Reference no: EM133043450
Question - The following balances were extracted from the books of Upendo Ltd, for the year ended 31 December 2013; Sh. "000"
Ordinary Shares 120,000
8% Preference Shares 40,000
Inventory (31 December 2013) 83,852
Trade Receivables 27,200
Bank Balance 7,796
10% Debentures 16,000
General Reserves 28,000
Gross Profit for the year 81,508
Bad Debts 340
Salaries and Wages 28,200
Insurance and Rates 1,410
Telephone Expenses 620
Electricity Expenses 1,216
Debenture Interests 800
Directors Fees 2,500
General Expenses 3,108
Motor vehicles at cost 29,100
Accumulated depreciation on motor vehicles 22,300
Office Equipment at cost 44,640
Accumulated Depreciation on Office Equipment 17,200
Land 100,000
Buildings at cost 32,200
Trade Payables 13,722
Revenue Reserves (1st January 2013) 24,252
Additional information
1. Accrued electricity expenses as at 31 December 2013 amounted to Sh. 548,000.
2. The amount of insurance includes a premium of Sh. 300,000 paid in September 2013 to cover the company for six months from 1 October 2013 to 31 March 2014.
3. Depreciation is provided for as follows:
Office equipment - 15 % per annum on cost
Motor vehicles - 20% per annum on cost
4. Provisions are to be made for:
Directors fees - Sh. 5,000,000
Audit fees- Sh. 1, 200,000
Outstanding debenture interest
5. The directors have recommended the following:
Sh. 12,000,000 be transferred to general reserves
Dividends on preference shares be paid
Payment of 10% dividend on ordinary shares
Note: Ignore depreciation on buildings
Required -
a) Prepare the income statement for the year ended 31 December 2013.
b) Prepare the statement of financial position as at 31 December 2013.