Reference no: EM133129774

Question - The book-keeper of B. Ltd. prepared the following trial balance as at 31 December 2019:

	Sh.'000	Sh.'000
Ordinary shares @ 20 each		100,000
Share premium		50,000
Retained profits as at 1 January 2019		100,000
10% debentures		100,000
Stock	200,000
Motor vehicles	100,000
Provision for depreciation a- motor vehicles		60,000
Machinery	120,000
Provision for depreciation   - machinery		50,000
Buildings at cost	230,000
Provision for depreciation on buildings		70,000
Sales		750,000
Purchases	350,000
Discounts	2,000
Returns	2,000
Carriage	72,000
Rates	200,000
Advertising	10,000
Creditors		200,000
Debtors	200,000
Provision for doubtful debts		6,000
Debenture interest	5,000
Cash at bank		5,000
	1,491,000	1,491,000

Additional information:

1. Rates are prepaid up to Sh.1,20,000.

2. Advertisement is accrued by sh.40, 000.

3. Write off 5% as bad debts.

4. Provision for bad debts at the rate of 2.5%

5. Directors have declared a dividend of 75 cents per share.

6. Stock as at 31 December 2019 is valued at Sh.180,000,000

7. Depreciation is at the rate of 12% on cost for motor vehicles,10% on buildings on cost and at the rate of 8% on reducing balance basis for machinery.

8. A motor vehicle whose original cost was 2800,000 was disposed on 14th June 2019 for sh.2500, 000.The accumulated depreciation on this vehicle was sh.170,000

9. On 10th October 2019 the buildings were revalued to sh.370,000,000.

10. Transfer 5% of the profits to general reserve.

11. Tax is at the rate of 30%.

Required -

(a) Prepare the Income statement for the year ended 31 December 2019.

(b) Prepare the Balance sheet as at 31 December 2019.