Unit: Financial accounting
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Login to Access| Allan Abedi Receipts and payments for the year ended 30 September 2025: |
| Sh.“000” | Sh.“000” | ||
| Balance brought forward | 9,600 | Wages and salaries | 177,600 |
| Receipt from trade receivables | 836,400 | Trade payables | 584,400 |
| Insurance | 18,000 | ||
| Lighting and heating | 7,200 | ||
| Printing and stationery | 2,400 | ||
| Mobile phone expenses | 1,200 | ||
| General expenses | 2,400 | ||
| Office equipment | 12,000 | ||
| Drawings | 18,000 | ||
| Balance carried forward | 22,800 | ||
| 846,000 | 846,000 |
| 1. | The following balances were available for the year ended 30 September: | ||
| 2025 Sh.“000” | 2024 Sh.“000” | ||
| Motor vehicles (Book value) | 25,200 | 33,600 | |
| Office equipment (Book value) | 71,400 | 72,000 | |
| Trade receivables | 74,400 | 67,200 | |
| Trade payables | 36,000 | 32,400 | |
| Inventories | 73,200 | 75,600 | |
| Lighting and heating owing | 3,000 | 2,400 | |
| Prepaid insurance | 2,400 | 1,200 | |
| 2. | Allowance for credit loss is provided at the rate of 5% on outstanding trade receivables. | ||
| Sh.“000” | Sh.“000” | Sh.“000” | Sh.“000” | ||
| Capital and liabilities: | Assets: | ||||
| Capital | 694,000 | Non-current assets: | |||
| Net profit | 126,000 | Plant and equipment | 634,000 | ||
| 820,000 | Less: Depreciation | (72,000) | 562,000 | ||
| Drawings | (160,000) | Furniture and fittings | 70,000 | ||
| 660,000 | Less: Depreciation | (14,000) | 56,000 | ||
| Current liabilities: | 618,000 | ||||
| Accounts payable | 50,000 | Current assets: | |||
| Bank balance | 1,520 | 51,520 | Inventory | 28,000 | |
| Accounts receivable | 57,000 | ||||
| Suspense account | 8,520 | 93,520 | |||
| Total capital and liabilities | 711,520 | Total assets | 711,520 |
| Utamaduni Ltd. Statement of financial position as at 30 June 2023 |
| Cost Sh.“000” | Accumulated Depreciation Sh.“000” | Net book value Sh.“000” | |
| Assets: | |||
| Non-current assets | 363,400 | 103,500 | 259,900 |
| Current assets: | |||
| Inventory | 316,250 | ||
| Accounts receivable (Less allowance for doubtful debts) | 278,070 | ||
| Bank balance | 25,875 | 620,195 | |
| Total assets | 880,095 | ||
| Capital and liabilities: | |||
| Authorised issued and fully paid Share capital 3,220,000 shares of Sh.100 each | 322,000 | ||
| Share premium | 23,000 | ||
| Profit for the year | 132,250 | ||
| 477,250 | |||
| Current liabilities: | |||
| Accounts payable | 402,845 | ||
| Total capital and liabilities | 880,095 |
| 1. | A new machine purchased for Sh.2,300,000 had been recorded in the repairs account. |
| 2. | An inventory sheet had been misplaced causing the closing inventory to be undercast by Sh.2,300,000. |
| 3. | An invoice from a supplier of Sh.1,460,500 had been omitted from the books. |
| 4. | Bank reconciliation had not been done and the following items on the bank statement had not been entered in the books:
|
| 5. | An additional allowance of Sh.575,000 is required in respect of doubtful debts. |
| 6. | No provision has been made for electricity expense of Sh.402,500 and audit fees of Sh.1,035,000. |
| 7. | The company has signed an agreement to buy a new plant costing Sh.8,050,000 to be delivered and installed in six months’ time. |
| 8. | Depreciation on non-current assets is provided at 10% per annum on straight line basis. A full year’s depreciation is charged in the year of purchase. |
Required: | |
| (i) | Journal entries to correct the above errors. (Narrations not required). |
| (ii) | Corrected statement of profit or loss for the year ended 30 June 2023. |
| Cash book (extract) |
| Sh.“000” | Sh.“000” | ||
| Receipts during the month | 2,938 | Balance (1 June 2023) | 1,522 |
| Balance (30 June 2023) | 1,108 | Payments during the month | 2,524 |
| 4,046 | 4,046 |