$1.$Quiva limited has presented the following draft statement of financial position as at $31$st July

$2022$ to you;

Quiva Limited

Draft statement of financial position

As at $31$st July $2022$

Non$-$ current assets Ksh$\mathrm{.}000$ Ksh$000$

Property, plant and equipment at cost $16,000$

Accumulated depreciation $(6,250)9\mathrm{.}750$

Investment at cost $52,000$

$61,750$

Current assets

Inventories $25,700$

Accounts receivable $($net$)31,780$

Prepaid rent $200$

Cash and cash equivalents $84,065141,748$

Total assets $203,498$

Equity and liabilities

Share capital $150,000$

Accumulated profits $16,673$

Non$-$current liabilities

Notes payable $4\mathrm{.}050$

Current liabilities

Accounts payable $14,620$

$2$

Accruals $9,933$

Corporate tax $4,129$

Interest payable $93$

Dividends payable $4,00032,775$

$203,498$

After perusal of related records, you identify the following;

i$)$ The accumulated profit as at $31$st July $2021$ amounted to Ksh $4,723,000.$

ii$)$ Inventory as at $31$st July $2023$ was overstated by Sh $2,300,000.$

iii$)$ Receipts of Sh $500,000$ for goods to be delivered sometime in October $2022$ was

included in the sales figure for the year ended $31$st July $2022.$It is the company$$s policy

to recognize revenue at point of sale.

iv$)$ The allowance for bad debts was to be equal to $5\%$ of the accounts receivable balance

as at $31$st July $2022.$The allowance for uncollectable bad debts provided amounted to

Sh $1,718,000.$

v$)$ Sh $30,000$ with respect to the prepaid rent balance presented in the balance sheet had

expired. Adjustment for the same had not been made.

vi$)$ A provision of Sh $180,000$ in respect of audit fees has not been made.

vii$)$ Included in the depreciation charge for the year is depreciation amounting to Sh

$450,000$ provided using the straight line method. It should have been provided using

reducing balance method at the rate of $10\%.$

viii$)$ Installment tax of Sh $252,000$ had been paid during the year. The same has not been

recorded in the books.

Required;

a$)$ Prepare an income statement showing the correct profit or loss for the period ended $31$st

July $2022.(10$ Marks$)$

b$)$ The revised statement of financial position for Quiva limited$.(10$ Marks$)$