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Illustration for preparing final accounts
K Ltd established a branch in Arusha Tanzania on 1.1.X2, when Kshs 1 = TShs 15. PPE costing Kshs 800,000 were purchased on that day. In addition, cash of Shs 500,000 was sent to Arusha on 1.1.X2, together with goods which had cost K Ltd Shs 1m. The Arusha branch sells HO goods and also goods purchased in Tanzania.Additional information:1) Inventory at 31 December 20X2 was valued at Tsh 6 million, being goods from HO.2) Depreciation is to be charged at 10% on the cost of fixed assets.3) Accrued expenses amounted to Tsh 1.5 million.4) Prepaid expenses amounted to Tsh 1.8 million.5) There was no closing inventory of goods purchased in Tanzania.6) The remittance was made on 1 Oct 2002 and translated into Ksh 1,650,000.7) Exchange rates during the year were:Required:Income statements for the year to 31 December X2 and balance sheets as at that date ina) Tanzanian shillingsb) Kenya shillings:
Translation of Arusha branch trial balance (functional currency method)
Original trial balance
Rate
Translated trial balance
Tsh’000
Ksh’000
PPE
12,000
1/15
800
Sales
48,000
1/12
4,000
Goods from head office
15,000
1,000
Purchases in Tanzania
1,250
Expenses
17,700
1,475
Receivables & Payables
2,000
1/10
200
100
Cash at bank
Remittances to Kenya
19,500
ACT
1,650
Head office current a/c
34,500
2,300
Closing inventory (for balance sheet)
6,000
400
Closing inventory (for trading a/c)
Depreciation expense (P&L )
1,200
80
Provision for depreciation (balance sheet)
Accrued expenses (balance sheet)
1,500
150
Prepaid expenses (balance sheet)
1,800
180
92,200
8,105
7,030
Exchange gain
205
7,235
Translation of Arusha branch trial balance ((Presentation method)
Receivables and Payables
Closing inventory (for balance sheet0
600
500
120
_____
7,170
____
_935
Arusha Branch
Income statement for the year to 31 December X2 (functional currency method)
Cost of sales:
- Goods from head office
- Purchases
30,000
2,250
Less closing inventory
(6,000)
(400)
(24,000)
(1,850)
Gross profit
24,000
2,150
-
2,355
General expenses
Depreciation
(18,900)
(1,555)
Net profit
5,100
Income statement for the year to 31 December X2 (Presentation method)
2,500
(500)
(2,000)
(1,575)
425
Balance sheet as at 31 December X2 (Functional method)
Non-current assets
Property plant and equipment
10,800
720
Inventory s
Receivables
Prepayments
Bank
11,800
980
22,600
1,700
20,100
1,450
Payables
Accruals
250
GFHO
Fixed Assets
Bal c/d
Cash
7,500
Remittance
Bal b/d
Branch profit
39,600
3,100
Balance Sheet as at 31 December X2 (Presentation method)
1,080
Inventory
1,180
2,260
2,010
935
3,660
Dillings Ltd is a wholesaler and distributor of catering of office equipment. The following list of balances was extracted from its books at 31 March 2004: 1428_Prepare the Income
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