Finance accounting easy 2 question Needed ASAP

BCAC 321: ADVANCED FINANCIAL ACCOUNTINGQUESTION TWO
A B & C have been in partnership business sharing profits and Losses in the ratio of 3:2:2. On 31st
December 2022, they decided to admit D into the partnership on payment of capital of Kshs
5,000,000. The Balance sheet on that date of capital was as follows:
Kshs’000’
Land and buildings
Motor vehicles
Furniture
Current Assets:
Stock
3,000
Debtors
2,000
Cash at Bank
1,000
Current Liabilities:
Creditors
2,000
Accruals
1,000
Net Assets
Financed By:
Capital: A:
B:
C:
Current Accounts: A:
B:
C:
Kshs ‘000’
10,000
5,000
4,000
6,000
(3,000)
3,000
22,000
7,000
5,000
3,000
3,000
2,000
2,000
15,000
7,000
22,000
Additional Information:
1. For the purpose of admission, the assets were revalued as follows:
Goodwill
Kshs 900,000
Land & buildings Kshs 12,000,000
Motor vehicles
Kshs 4,000,000
Stock
Kshs 3,500,000
Debtors Kshs 1,500,000
2. The new partnership does not wish to retain goodwill in its accounts.
3. The new profit-sharing ratio is 3:3:2:1. To A, B, C and D respectively.
Required:
(a) Partners’ Capital Accounts
(b) Revaluation Account
(c) Balance sheet after admission.
(3 Marks)
(3 Marks)
(4 Marks)
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QUESTION THREE
The following Balances were extracted from the books of Ponconprops Limited, as at 30th June 2023
was as follows.
Ordinary share capital
11% Preference Shares
Land & Buildings (cost Ksh 400,000)
Equipment (cost Ksh 860,000)
Motor Vehicles (Cost Ksh 860)
Goodwill (cost Ksh 800,000)
10% Debentures (Repayable year 2028)
Inventory on 30th June 2023
Salaries & wages
Directors remuneration
Motor vehicles expenses
Rates & insurance
General expenses
Debenture interest
Accounts payables
Accounts receivables
Cash at Bank
General Reserves
Share Premium
Interim ordinary dividends paid
Non-Current assets (land & buildings) revaluation reserve 1st July 2021
Retained earnings account at 30th June 2022
Gross profit for the year
Cr. Ksh ‘000’
3,500
1,000
6,000
280
602
775
1,500
1,361
462
315
406
146.5
28
75
568.5
930.5
419.5
250
700
175
250
847
3,360
Additional information:
(i) Authorised share capital:
40,000, 11% preference shares of Ksh 25 each at par.
500,000 ordinary shares of Ksh 10 each at par.
(All issued shares are fully paid) During the year 100,000 ordinary shares were issued at a
premium of 20%. No record has been made in regard to the issues. The new shares do not
rank in dividends for the year.
(ii) The policy of the company regarding depreciation is;
•
No depreciation on land & buildings but to revalue the buildings at the end of every two
years. The market value as at 30th June 2023 has been agreed with valuation experts at
Ksh 6,300,000.
•
To depreciate motor vehicles at the rate of 25% on reducing balance method.
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•
To depreciate equipment at the rate of 10% on cost using the straight-line method.
(iii)The interest on debentures is paid semi-annually on 1st July and 1st January. The company the
company makes provision for interest accrued during a financial year but is not yet paid.
(iv) Goodwill is written off at the rate of 3.125% p.a. on cost.
(v) The directors propose that the preference dividend and also a final ordinary dividend which
will bring the total dividend on ordinary shares for the year to Ksh 1.50 per share be paid.
The directors also propose to transfer Ksh 100,000. To general reserve.
(vi) The corporation tax on the profit for the year is estimated at Ksh 250,000.
(vii)
The company has decided to write off debts of Ksh 30,500 which it considers bad.
Whereas doubtful debts loss has previously been recognized when specific accounts are
known to be uncollectible, the company now proposes to establish and maintain (with
effect from the current year) a general provision for doubtful debts at 4% of debtors.
(viii) Rates include an amount of Ksh 96,000 paid to the municipality for the 12 months to 31st
December 2023.
(ix) Casual labourers have not yet been paid Ksh 45,000 in respect of the services rendered during
the last two weeks of June 2023.
(x) Sales in the year amounted to Ksh 5,400,000 while purchases were Ksh 2,100,000.
Required:
(a) Prepare the income statement for the year ended 30th June 2023.
(4 Marks)
(a) Prepare a statement of financial position.
(3 Marks)
(c) Prepare the statement of changes in equity for the year
(3 Marks)
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