BAF1201-FINANCIAL ACCOUNTING II CAT

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BAF1201-FINANCIAL ACCOUNTING II CAT
DO ALL THE QUESTIONS
QUESTION ONE

The following are extracts from the financial statements of Wewe Ltd. As at 31 March:

2018 2017
Sh.’000’ Sh.’000’ Sh.’000’ Sh.’000’
Fixed assets:
Goodwill
Freehold land and building
Plant and machinery (NBV)
Investment at cost

Current assets:
Stocks
Accounts receivable
Investments
Cash at hand and bank

Current liabilities
Bank overdraft
Accounts payable
Proposed dividends
Taxation

Net current assets

15% debentures

Capital and reserves:
Authorised, issued and paid Sh.10
Ordinary shares
Share premium
Revaluation reserve
Retained profit

10,050
6,140
1,710
200
18,100

(2,390)
(5,850)
(450)
(820)
(9,510)
2,800
16,800
5,860
3,600
29,060

8,590
37,650
(7,500)
30,150

18,000
1,500
4,500
6,150

8,700
7,800
840
430
17,770

(6,540)
(5,250)
(380)
(600)
(12,770)
2,900
12,000
6,350
3,750
25,000

5,000
30,000
(9,000)
21,000

15,000
750
–
5,250
30,150 21,000

The profit and loss appropriation account for the year ended 31 March 2018 is given below:

Sh.’000’ Sh.’000’
Net profit before tax
Less: Corporation tax
Profit after tax
Dividends:
Interim (paid)
Proposed (paid)

150
450 2,400
900
1,500

600
900

The following additional information is provided:

1. Profit for the year is arrived at after charging:

Sh.’000’
Depreciation on plant and machinery
Goodwill amortisation 1,150
420

2. During the year, plant with a net book value of Sh.750,000 was sold for Sh.1,470,000. The plant had originally cost Sh.3,000,000.
3. The investments portfolio was reduced by selling one block of shares at a profit
of sh.160,000.

Required:
Cash flow statement in accordance with IAS 7. (18 marks)

QUESTION TWO

Masaba Company Ltd. is a retail provider with an authorised share capital of
800,000 Sh.20 ordinary shares and 250,000 8% Sh.20 redeemable preference shares.

The following financial information reflects the position of the company as at 31 December 2018 after preparing the Trading, profit and loss account:

Sh.
`000′
Provision for depreciation Fittings 1,500,
Motor vehicles 3,740
Goodwill 1,200
Issued share capital: 600,000 Sh.20 Ordinary shares 12,000
250,000 Sh.20 Redeemable preference shares 5,000
Share premium account 400
Trade debtors and prepayments 1,708
Land and buildings at valuation (Cost Sh.4, 400,000) 18,400
Capital redemption reserve fund 3,000
Fittings at cost 3,000
Motor vehicles at cost 7,940
10`% Debentures 1,600
Trade creditors and accruals 960
Short-term investments (Market value Sh.860,000) 7 8 0
Stock at 31 December 2018 2,960
Bank overdraft 540
Revaluation reserve 1,000
Net profit for the year 1,440
Retained profit at 1 January 2018 4,460
General Reserve 1,100
Provision for doubtful debts 48
Interim dividend paid – Ordinary 600
– Preference 200

The following resolutions relating to year ended 31 December 2018 have been passed by the board of directors of the company
1. Transfer Sh.500,000 to General Reserve.
2. Provide for 5% final dividend and final preference dividend on shares issued and
outstanding on 31 December 2018.
3. Make a bonus issue of 100,000 fully paid ordinary shares from the retained profits
account.

Required:
(i) The appropriations account of Masaba Company Ltd. for the year ended 31 December 2018. (4 marks)
(ii) Statement of financial position of Masaba Company Ltd. as at 31 December 2018. (8 marks)

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