Jinja plc sells face shields to hospitals in Kampala. You have been provided with the following information of the company for the year ended 31 December 2020.

Jinjaplc

£’000
Furniture and fittings at cost acquired during the year – B	20,000
Delivery trucks at cost acquired during the year – B	6,500
Vehicle running expenses – I	1,200
Inventory of finished good as at 31 December 2020 – I&B	3,000
Trade receivables as at 31 December 2020 – B	12,000
Rent expenses (see note4 below) – I	7,000
General expenses (see note 5 below) I	2,100
Revenue -I	97,400
Purchases -I	68,350
Interest on loan- I	620
Salaries and wages- I	4,400
Inventory of finished goods as at 1 January 2020 – I	4,000
Trade payables as at 31 December 2020 -B	58,350
Bank balance (positive) as at 1 January 2020 - I	58,018

Notes:

1. The furniture and fittings were purchased on 31 October 2020. The company applies 5% depreciation charge using the reducing balance method on all furniture and fittings. When such assets are acquired, a full annual charge is made in the first year irrespective of the month of purchase.

2. The delivery trucks were purchased on 30 April 2020. The company applies 15% depreciation charge on apro databases using the straight-line method for all trucks.

3. Company tax is charged at the rate of 20%. The tax for the year was paid in full.

4. An additional sum of £2 million relating to rent was unpaid as at 31 December 2020. This amount is not included above. The company has arranged to make full payment together with the 2021 rent in the 4^th quarter of 2021.

5. Included in the general expenses is £150,000 being a council rate payment for 2021 which was paid in advance.

6. A provision for doubtful debts is to be made at 14.5% of the trade receivables as at 31 December 2020.
7. In March 2020, the company obtained a loan of £16,696,000 from Barclays Bank which is repayable in 2030. The interest on the loan for 2020 amounts to £620,000 and this was fully paid during the financial year.

8. The company owns land valued at £327,008,000.
9. On March 5^th, 2020, the company made a share split of 2:1 of its ordinary shares.

10. On August 14^th 2020, the company made rights issue of 2:4 of ordinary shares at a discount of 20% [the shares were trading at £15 pershare before the rights].

The rights issue was fully subscribed and all monies received as at December31, 2020.

11. The company did not declare any dividend, therefore any profit made is retained.

12. The balances of the company’s capital and reserves as at start of the year are:

£’000

40 million ordinary shares of 50 pence per share 20,000

Capital redemption reserve 2,000

Merger reserve 195,334

Revenue reserve 160,700

Share premium 11,000

13. Assume that there were no other assets owned by the company and that depreciation is tax-deductible.

Required:

1. 1.Prepare the Statement of Financial Performance (Income Statement) of Jinjaplcfor the year ended 31 December 2020.

2. 2. Prepare the Statement of Financial Position of Jinjaplcas at 31 December 2020.

3. Based on your statements prepared above, comment on the liquidity and performance of the business. Your comment should address any concerns

identified if any.

Answer rating: 100% (QA)

Part 1 Statement of Income Expenses Income To inventories 4000 To Puchase I 68350 To Vehicle expense ... View the full answer