H Plc acquired 80 % of the ordinary shares , 25% of the preference shares of...

H Plc acquired 80 % of the ordinary shares , 25% of the preference shares of S plc when the retained profits S Plc were Sh.10,000.In addition , H Plc owns 30% of the loan stock of S Plc. The following are their draft profit and loss accounts of the year to 31st December Yr 5.

	H Plc	S Plc
	Sh.	Sh.
Turnover	962,212	227,383
Cost Of Sales	-621,679	-169,463
GROSS PROFIT	340,533	57,920
Distribution Costs	-21,460	-2,460
Administration Costs	-46,293	-13,940
	272,780	41,520
Investment Income	16,900	2,400
Interest On Loan Stock	0	-4,000
	289,680	39,920
Taxation	-121,340	-13,920
	168,340	26,000
EOI	21,500	6,000
	189,840	32,000
Dividend	-40,000	-10,000
Retained Profit for the year	149,840	22,000
Retained b/f	30,000	12,000
	179,840	34,000

The following information is relevant:

a)Turnover of of H included Sh.100,129 of goods sold to S

b) The Stock of S includes an unrealized profit of Sh.3,400

c)The Dividends of S are Sh.6,000 ordinary and Sh.4,000 preference

d) The investment income of H included Sh.4,800 of S ordinary dividend, Sh.1,000 of S preference dividend and Sh.1,200 of S loan stock interest.

Required:

Provide Consolidated Income Statement .Show the necesary workings

Expert Solution

	H Plc	S Plc	Total (H Plc + S Plc)	Adjustment remarks	Adjustment Amount	Consolidated
	Sh.	Sh.	Sh.		Sh.	Sh.
Turnover	962,212	227,383	1,189,595	Inter Sales	-100129	1,089,466
Cost Of Sales	-621,679	-169,463	-791,142			-791,142
				Unrealized profit add back	-3400	-3400
GROSS PROFIT	340,533	57,920	398,453	-		294,924
Distribution Costs	-21,460	-2,460	-23,920	-		-23,920
Administration Costs	-46,293	-13,940	-60,233	-		-60,233
	272,780	41,520	314,300	-		210,771
Investment Income	16,900	2,400	19,300	Reduce inter Investment income from S Plc Ordinary dividend 4800 Preference dividend 1000 Loan stock interest 1200	-7,000	12,300
Interest On Loan Stock	0	-4,000	-4,000	Interest On Loan Stock to H Plc	1200	-2,800
	289,680	39,920	329,600		-5,800	220,271
Taxation	-121,340	-13,920	-135,260			-135,260
	168,340	26,000	194,340			85,011
EOI	21,500	6,000	27,500			27,500
	189,840	32,000	221,840			112,511
Dividend	-40,000	-10,000	-50,000	Reduce expense for inter dividends paid Ordinary dividend 4800 Preference dividend 1000	5,800	-44,200
Retained Profit for the year	149,840	22,000	171,840			68,311

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