Murungi Co. Ltd. Extracted the following trial balance as on 31st December, 2004.

Dr                               Cr

Shs.                              Shs.

Share Capitalrrtt

250,000 ordinary shares of Shs.100 each                                                                         25,000,000

125,000 10% preference shares of Shs. 100 each                                                             12,500,000

10% debentures                                                                                                             10,000,000

Freehold premises at cost                                                           25,000,000

Motor vehicles at cost                                                                 7,500,000

Fixtures and fittings                                                                    1,300,000

Plant and machinery at cost                                                         2,500,000

Profit and loss A/C, 1 Jan 2004                                                                                        2,685,000

Sales                                                                                                                            59,475,000

Stock at 1 Jan 2004                                                                   10,775,000

Bad debts written off                                                                      125,000

Purchases                                                                                 16,900,000

Dividends paid at 30 June 2004

Preference dividend                                                                       625,000

Ordinary dividend                                                                       1,250,000

Debenture interest paid at 30 June 2004                                            500,000

Trade Debtors/Creditors                                                               2,700,000                    1,500,000

Accumulated depreciation at 1 Jan 2004

Plant and machinery                                                                                                      1,025,000

Motor vehicles                                                                                                              2,250,000

Fixture and fittings                                                                                                           800,000

Salaries and wages                                                                      4,100,000

Cash and bank balances                                                               4,775,000

Investments                                                                              22,500,000

Office expenses                                                                           2,300,000

General reserve                                                                                                             1,000,000

Selling and distribution expenses                                               13,750,000

Directors’ emoluments                                                                3,700,000

Auditors’ remuneration                                                                   800,000

Preliminary expenses                                                                    1,200,000

Sundry income                                                                                                             1,625,000

Bank charges                                                                                    60,000

Income from investments                                                                                              4,500,000

 

                                                                                                     122,360,000                  122,360,000

 

Additional information available at 31 December 2004

  • Stock Shs. 3,750,000
  • Depreciate fixed assets as follows:
  • Motor vehicle at 20% on cost
  • Fixtures and fittings at 12.5% on book value

There were no disposals and acquisition of non-current assets during the year.

  • Expenses due but unpaid include salaries and wages Shs. 62,500 and office expenses paid in advance amount to Shs. 120,000
  • Provision for bad debts is to be set up at 2.5% of sundry debtors
  • Debenture interest is payable half yearly, the half year to 31 December 2004 being due on that date
  • Corporation tax is chargeable at 30% on the current year’s profits .
  • The directors of Murungi Co Ltd recommend appropriation as follows:
  • The preliminary expenses to be written off in full
  • Transfer to be made from the Profit and Loss Accounts as follows:
  • General reserve Shs. 1,500,000
  • Payment of final dividend of 12.5% on the ordinary share s

Required:

  1. Trading, Profit and Loss Accounts for the year ended 31 December 2004
  2. Profit and Loss Appropriation Account
  3. Balance sheet as at 31 December 2004

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