Group Assignments Due date 16/05/2025

Question 1

a) What are the consequences of incorporation (10 marks)

b) The following information was extracted from the books of Magidi as at 31 October
2020

($
000)
Cash 15,1
Insurance 75
Inventory(1 Nov 2009) 350
General expenses 60
Ernegy expenses 66
Marketing expenses 50
Wages and
salaries 675
Discount
received 50
Share premium 200
Retained income (1 November 2009) 315
Provision for bad debts 40
Sales 5 780
Telephone 80
Property
expenses 100
Bank overdraft 94
Returns inwards 95
Trade payables 290
Loan interest 33
Trade receivables 900
Purchases 3 570
7%
Loan 470
Bad debts 150
$1 Ordinary
Shares 1 800
Accumulated
depreciation
Buildings 360
Motor Vehicles 80

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 Furniture and Equipment 420
Land at Cost 740
Building at Cost 1 500
Motor Vehicles at Cost 240
Furniture and Equipment at cost 1 200

You have been provided with the following information:

(i)Closing inventory was valued at $275 000. However $45 000 of this inventory was
declared slow moving and could fetch only $20 000 on the market.
(ii)Prepaid marketing expenses $5 000.
(iii)Provision for bad and doubtful debts was decided at 5% of trade receivables.
(iv)Accrued wages $40 000.
(v)Depreciation rates
Buildings 5% on cost per annum.
Motor vehicles 20% using the reducing balance method.
Furniture and Equipment 20% on cost.
(vi) No dividends have been declared or paid.
(vii) Corporation tax of $150 000 is to be provided.
(viii)During October 2010 a bonus issue of one for ten was made to ordinary shareholders.
This has not been entered into the books. The share premium account was used for this
purpose.
Prepare the following reports magidi Ltd for internal use :

(a) The Profit and Loss and Other Comprehensive Income for year ended 31
December 2020
(b) The Statement of Changes in Equity for year ended 31 December 2020
(c) The Statement of Financial position as at 31 December 2020 (15marks)

Question 2

a) Discuss the reasons for payment of goodwill (10 marks)

b) Discuss advantages and disadvantages of using fifo, avco and standard costing (15
marks)

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Joka ltd supplies you with the following

2023 ($)
2022 ($)

Non Current Assets 185,000

138,000

Land 75,000 31,000

Buildings 128,000 128,000
Less Provision for depn (30 000) (32,000)
Equipment
20,000 16,000
Provision for depn
(8,000) (5,000)

Current Assets 163,500

127,500

Inventory 82,000 67,500

Trade recoverable 30,000 32,000
Prepaid Expenses 8,500 7,000
Bank
43,000 21,000
Total Assets 348,500
265,500

Financed by

Capital 208,000
100,000

Retained Income 122,300

67,500

Drawings (18,000) -

312,300
167,500

Non –Current Liabilities : 32,000

82,000

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Mortgage loan 12,000
32,000

Debentures 20,000 50,000

Current Liabilities : 19,200 16,000

Trade payables 18,000

15,200

Accrued salaries 1,200 800

Total Capital and Liabilities 363,500

265,500

Joka ltd,s statement of profit or Loss and other comprehensive income for year ended 31
Dec 2023

Sales 483 ,000

Less cost of Sales 283,800

Gross profit 199 ,200

Add interest income 2,000

201 ,200

Less expenses 130,091

Selling distribution 120,840

Depreciation 6,000
Tax (6,750)

Interest ( 3,250)

Profit for the year 61,109

Required

Prepare the Statement of cash flows for year ended 31 Dec 2023 and comment on it .(Clue
comment section by section). (10 marks)

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Question 3

a) Identify elements of corporate report and explain the purpose of each element. (10
marks)

Prepare the Statement of Profit or Loss and Other Comprehensive Income ; Statement of
Changes in equity and the Statement of Financial position from the following :

The following balances were extracted from the books of DD ltd for the year ending 31
December 2023

Details Dr ($) Cr ($)

Sales 300,000

Returns in/out 4,000 6,500

Purchases 180,000

Discounts 3,500 1,600

Carriage inwards 1,500

Trade payables 95,000

Packaging wages 800

Rent and rates 10,000

Electricity 18,200

Trade receivables 170,000

Buildings 250,000

Motor vehicles 60,000

Plant and equipment 30,000

Furniture and fittings 18,000

Provision for depreciation: buildings 3,000

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 Motor vehicles 12,000

Plant and equipment 8,000

Furniture and fittings 3,400

Opening inventory on 1 Jan 2023 30,000

Provision for bad debts 1,300

Wages and salaries 29,000

Administrative expenses 34,000

Insurance 1,800

Bank overdraft 5,000

Ordinary share capital 250,000

10% Preference Share capital 100,000

Retained income on 1 Jan 2023 55,000

840,800 840,800

Additional information:

(i) The Authorized share capital of DD Ltd is : 300,000 Ordinary shares of $1 each
and 200,000 Preference shares of $1 each

(ii) Rent prepaid $1,200 and rates accrued $400 at 31 Dec 2023

(iii) Depreciated Non-current assets as follows: Buildings 2,5% on cost

Motor vehicles 25% written down value

Furniture and fittings 10 % straight line

method

(iv) The Directors propose dividends of 5% on ordinary shares

(v) Provide for $15,000 Corporation tax

(vi) Provision for bad debts should be 5%

(vii) Closing inventory $45,000

Required:

To prepare the Profit and Loss and Other Comprehensive Income Statement; the statement of
changes in equity for the year ending 31 Dec 20123 and a Statement of financial position as
at that date for internal use. (40 marks)
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Due date 15/05/2025

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