The following balances were extracted from the books of Bashara Kabwa Enterprises, a wholesale business, as at 31 October 2018:
Trade receivables 990,000
Sales returns 79,420
Trade payables 330,000
Purchases returns 120,340
Discount received 93,720
Provision for depreciation: Motor vehicles 176,000
Fixtures and fittings 63,800
Allowances for doubtful debts 44,000
15% bank loan 220,000
Salaries and wage 1,034,000
Discount allowed 54,560
Bank balance 568,260
Cash in hand 26,400
Electricity expenses 103,840
Rent and rates 54,560
Freehold premises (cost) 1,569,700
Fixtures and fittings (cost) 334,400
Motor vehicles (cost) 462,000
Postage and telephone expenses 44,000
Insurance premiums 13,200
Bad debts written off 15,840
Motor vehicle expenses 84,920
Inventory (1 November 2017) 1,393,480
Interest on bank loan 16,500
1. The value of inventory as at 31 October 2018 was Sh. 1,036,400
2. Sales includes Sh. 300,000 worth of goods sold by Bashara Kabwa Enterprises agents, who are allowed 15% commission on such sales. This transaction has not been recorded in the books.
3. Depreciation is to be provided as follows:
Fixtures and fittings – 10% per annum on reducing balance basis.
Motor vehicle – 15% per annum on straight line basis.
4. Annual insurance premium amounted to Sh. 12,000.
5. As at 31 October 2017, there was a balance of Sh. 65,000 received from a customer in cash.
6. Salaries and wages were in arrears of Sh. 35,000
7. The Electricity bill for the month of October of Sh. 14,500 was received on 5 November 2018.
8. An allowance of 5% is to be maintained for doubtful debts.
9. Goods worth Sh. 48,840 had been distributed to potential customers as free samples.
a) Income statement for the year ended 31 October 2018
Statement of Financial position as at 31 October 2018
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