Antony Edwin PLC has provided the following data for the year 2023:

DETAILS	Dr	Cr
Office Supplies	40,000
Wages and Salaries	210,000
Utilities	65,000
Insurance	80,000
Share Premium		40,000
General Reserves		120,000
Debenture Interest	40,000
Loan Interest	55,000
Retained Earnings at January 1, 2023	60,000
Management Fees	80,000
Directors Fees	110,000
10% Preference Shares @ 2.		400,000
Ordinary Share Capital @ $0.50		800,000
10% Debenture		550,000
10% Loan		800,000
Property Plant and Equipment	1,800,000
Motor Vehicle	800,000
Prov. for Depreciation PPE		210,000
Prov. for Depreciation Motor Vehicle		68,000
Debtors	120,200
Creditors		155,500
Commission Income		80,000
Rental Income		120,000
Goodwill	400,000
Bank		65,700
Cash	95,500
Interim Ordinary Shares Premium	2,000
Interim Preference Shares Dividends	10,000
Stock at December 31,2023	580,000
Sales Revenue		2,000,000
Cost of Sales	861,500
	5,409,200	5,409,200

The following additional information was also available:

1. Wages is owing by $40,000 while insurance is prepaid by $25,000

1. The commission income is prepaid by $20,000 while rental income of $30,000 is owing

1. Provide for depreciation as follows: Property plant and equipment 10% on the straight line; motor vehicle 5% on the reducing balance.

1. Transfer $40,000 for the profits to the general reserves.

1. Corporation tax is estimated to be $50,000

1. The directors have approved the following: the settlement of the full preference share dividends; a new issue of 600,000 ordinary shares for which $480,000 was received by cheque from the broker. No further ordinary shares dividend was declared.

1. The Expenses should be appropriated as follows

Expense	Admin	S & D
Office Supplies	50%	50%
Wages and Salaries	70%	30%
Utilities	80%	20%
Insurance	40%	60%
Management Fees	80%	20%
Directors Fees	50%	50%
Depreciation	60%	40%

1. Goodwill impairment of 25% was estimated.

Required:

1. Prepare the statement of profit or loss and the statement of changes in equity for the year ending December 31, 2023; as well as the statement of financial position as at December 31, 2023. ( 35 marks)

1. Explain five factors that may influence a company's decision to pay dividends. (5 marks)

1. Explain three non cash dividend options that a company may pursue ( 5 marks )

1. Define the term goodwill and explain the implications of conducting annual impairment reviews.
2. (5 marks)

QUESTION 2

Thestatementsoffinancialposition of YellyLimitedas at31December2023and2024areasfollows.

	31 December 2023	31 December 2024
	$	$
Non-Current Asset(NBV)	668,000	712, 000
Current Assets:
Inventory	128, 000	192, 000
Receivables	76,000	110,000
Bank	-	27,200
	872, 000	1,041,200
Share Capital and Reserves
$1 Ordinary shares	400,000	500,000
Share premium	-	50,000
Retained Earnings	321,200	373,200
Current Liabilities:
Payables	52.000	58,000
Proposed dividends	36,000	32,000
Taxation	28,000	28,000
Bank	34,800	-
	872,000	1,041,200

The summarized Statement of Comprehensive Income for the two years ended 31 December 2023 and 2024 are as follows:

		31 December 2023	31 December 2024
		$	$
	Gross Profit	551,568	494,800
	Less Expenses	305,568	433,200
		246,000	61,600
	Profit on sale of fixed asset		50,400
	Net Profit before tax	246,000	112,000
	Taxation	(36000)	(28000)
	Net Profit after tax	210,000	84,000

The following information is also available:

1. Non-Current Asset sold during the year cost $136, 000, was sold for $55,200 and had accumulateddepreciation thereon of $131,200.
2. The increase in the share capital was due to a rightsissue
3. The company bought fixed assets at cost $216 000 during the year.
4. A proposed dividend for 2024 of $32,000 wasdeclared and approved.

Required:

A. Prepare the cash flow statement for the year ended 2024. (21 marks)

1. Outline the purpose of a cash flow statement. (4 marks)

QUESTION 3

The following information was obtained from the books of Aiden Ltd;

Condensed Income Statement for the year ended JUNE 30,
		2024		2023
	$000	$000	$000	$000
Turnover		58,000		49,000
Operating Profit		21,100		17,500
Interest		1,980		1,980
Net Profit before Tax		19,120		15,520
Tax		5,740		4,650
Profit After Tax		13,380		10,870
Dividends:
Ordinary	2,400		2,300
Preference	80	2,480	80	2,380
Profit for the year		10,900		8,490
Retained Earnings b/d		31,390		22,900
Retained Earnings c/d		42,290		31,390
Market price per share		1.75		1.50
Balance Sheet as at JUNE 30,		2024		2023
		$000		$000
Non-Current Assets		15,910		7,920
Net Current Assets		57,080		54,170
Total assets less current liabilities		72,990		62,090
Capital and Reserves
Ordinary Shares @ $0.25		9,900		9,900
8% Preference Shares $1 each		1,000		1,000
Retained Earnings		42,290		31,390
Non-Current Liabilities		19,800		19,800
		72,990		62,090

Required:

1. Compute the following ratios for 2023 and 2024:

1. Gearing
2. Time Interest Earned (TIE)
3. Return on Equity
4. Return on capital employed
5. Operating profit margin
6. EPS
7. Price earnings ratio
8. Dividend cover (8 marks)

1. Briefly comment on the results of your computation in (a) above (12 marks)

1. Would you invest in this firm? Discuss (5 marks)