Question

You are to draw up THE Income Statement for the year ending 31 December 2012 and the Statement of Financial Position as at that date for the following trail balance of Partido Limited

	DR Ksh.	CR Ksh.
Bank	8,100
Debtors	321,219
Creditors		237,516
Stock at January 1. 2012	290,114
Buildings at Cost	800,000
Equipment at Cost	320,000
Profit & Loss account balance at January 1, 2012		136,204
General Reserve		120,000
Fixed Asset replacement reserve		20,000
Ordinary Share capital		700,000
10% Debenture		100,000
Purchases	810,613
Sales		1,606,086
Carriage inwards	2,390
Carriage outwards	13,410
Salaries	384,500
Business rates	14,800
Office expenses	9,100
Sundry expenses	2,360
Provision for depreciation at January 1,2012;
Buildings		80,000
Equipment		96,000
Directors remuneration	119,200
	3,095,806	3,095,806

Additional information at 31 December 2012

1. Stock 317,426/=
2. Business rates outstanding 1,700/= and office expenses outstanding 245/=
3. Dividend proposed is 15%.
4. Transfers to reserves; General 70,000/=, Fixed asset replacement 30,000/=
5. Depreciation on cost; Buildings 5%; Equipment 15%
6. Debenture interest for the year has not been paid.

Answer 1

Partido Limited
Income Statement
For the year ending 31 December 2012
Sales		1,606,086
Less: Cost of Goods Sold
Opening Stock	290,114
Purchase	810,613
Carriage Inward	2390
	1,103,117
Less: Closing Stock	317,426	785,691
Gross Profit		820,395
Less: Operating Expenses
Carriage Outward	13,410
Salaries	384,500
Business Rates	14,800
Business Rates Outstanding	1,700
Office Expenses	9,100
Office Expenses Outstanding	245
Sundry Expenses	2,360
Depreciation on Building	40,000
Depreciation on Equipment	16,000
Interest on Debentures	10,000
Directors Remuneration	119,200	611,315
Net Profit		209,080
Disposition of Profit:
Proposed Dividend	105,000
Transfer to General Reserve	70,000
Fixed Assets Replacement	30,000	205,000
Retained Earning		4,080
P&L A/c Balance on Jan 1, 2012		136,204
P&L A/c Balance on Dec 31, 2012		140,284

Partido Limited
Balance Sheet
As on 31 December 2012
Liabilities	Amount	Assets	Amount
Capital:		Fixed Assets:
Ordinary Share capital	700,000	Buildings	760,000
10% Debenture	100,000	Equipment	304,000
Reserve:		Current Assets:
General Reserve	190,000	Bank	8,100
Fixed Asset replacement reserve	50,000	Debtors	321,219
Profit & Loss account	140,284	Stock	317,426
Current Liabilities:
Creditors	237,516
Provision for depreciation
Buildings	80,000
Equipment	96,000
Business rates outstanding	1,700
office expenses outstanding	245
Outstanding Interest on Debentures	10,000
Proposed Dividend	105,000
Total	1,710,745	Total	1,710,745