Introduction to Company Accounts and Cash Flow Statements

Define authorised share capital in the context of a newly incorporated company in Kenya. (2 marks)

(b) Apex Ltd. has prepared the following trial balance as at 30 September 2014: Sh. ‘000’ Sh. ‘000’ Freehold land at cost Buildings at cost Plant and equipment at cost Motor vehicles at cost Accumulated depreciation: Buildings Plant and equipment Motor vehicles Inventory as at 1 October 2013 Trade receivables and trade payables Bank and cash Sales Purchases Returns inward and returns outward Discounts allowed and discounts received Administrative expenses Selling and distribution costs Ordinary shares of Sh.100 each Retained earnings Suspense account 60,000 50,000 120,000 32,000 74,000 122,500 3,500 134,630 12,900 3,200 22,150 6,900 - 641,780 20,000 74,000 16,800 99,800 249,760 4,875 1,850 100,000 69,695 5,000 641,780 Additional information: 1. Inventory as at 30 September 2014 was valued at Sh.124, 875,000. 2. As at 30 September 2014, the following balances were relevant: Accruals Sh. ‘000’ Prepayments Sh. ‘000’ Administrative expenses Distribution costs 500 5,300 12,000 8,000 3. Depreciation is to be provided as follows: Asset Rate per annum Buildings Plant and equipment Motor vehicles 4% on cost 20% on cost 25% on reducing balance 4. Motor vehicles acquired for Sh.14, 000,000 in total and written down to Sh.6, 000,000 as at 1 October 2013 were sold for Sh.5, 000,000. The cash proceeds were posted in the suspense account. 5. Estimated tax for the year is Sh.15 million. Required: (i) Income statement for the year ended 30 September 2014. (ii) Statement of financial position as at 30 September 2014. REVISION PARTNER 32 CPA SEC 1-FA, LAW AND ENTREPRENEURSHIP

The following balances were extracted from the books of Upendo Ltd. for the year ended 31 December 2013: Sh. ‘000’ Ordinary shares 8% preference shares Inventory (31 December 2013) Trade receivables Bank balance 10% debentures General reserves Gross profit for the year Bad debts Salaries and wages Insurance and rates Telephone expenses Electricity expenses Debenture interest Directors' fees General expenses Motor vehicles at cost Accumulated depreciation on motor vehicles Office equipment at cost Accumulated depreciation on office equipment Land Buildings at cost Trade payables Revenue reserves (I January 2013) 120,000 40,000 83,852 27,200 7,796 16,000 28,000 81,508 340 28,200 1,410 620 1,216 800 2,500 3,108 29,100 22,300 44,640 17,200 100,000 32,200 13,722 24,252 Additional information: 1. Accrued electricity expenses as at 31 December 2013 amounted to Sh.548,000. 2. The amount for insurance includes a premium of Sh.300,000 paid in September 2013 to cover the company for six months from 1 October 2013 to 31 March 2014. 3. Depreciation is to be provided as follows: Office equipment - 15% per annum on cost Motor vehicles - 20% per annum on cost 4. Provisions are to be made for: • Directors fees - Sh.5,000,000 • Audit fees - Sh.1,200,000 • Outstanding debenture interest. 5. The directors have recommended the following: • Sh.12,000,000 be transferred to general reserves. • Dividends on preference shares be paid. • Payment of a 10% dividend on ordinary shares. Note: Ignore depreciation on buildings Required: (a) Income statement for the year ended 31 December 2013. (b) Statement of financial position as at 31 December 2013.