Panter limited is a medium-sized company engaged in the business of selling sports accessories. The business...

Transcribed Image Text:

Panter limited is a medium-sized company engaged in the business of selling sports accessories. The business premises are rented for sh.8 million per annum. During the year ended 30 September 2005, the book keeper maintained incomplete records and some information was lost. However, the balances availed as at 30 September 2004 were as follows: Authorised, issued and fully paid Ordinary shares of sh.10 each Retained profit Accounts payable: Trade Other 1 2 3 4 5 6 7 8 9 10 An examination of panter's books of account for the year ended 30 September 2005 revealed the following: Amounts banked: sh.000 Repairs. Sundry expenses 30,000 27,500 Payments by cheque: Purchase of inventory Wages Rent Motor vehicle expenses Purchase of: Motor vehicles Cash in hand Loan from Len Ltd. (1 January 2005) Sale of old stocks Other collections Wages Motor vehicle expenses Sundry expenses 14,000 360 71,860 Fixture and fittings Accounts payable: Sh.000 Motor vehicles (net book value) 12,000 Fixtures and fittings (net book value 4,000 Inventory 20,000 Accounts receivable. 16,800 Prepayments - rent Cash at bank Trade Other Sh.'000' 5,000 12,000 214,170 231,170 234.250 Amounts paid out from the cash before bankings were made: Sh.'000' Sh.'000' 162,040 21,220 7,500 12,140 15,000 5,000 5,220 6,130 5,160 830 750 6,740 The following closing balances were ascertained as at 30 September 2005. Cash in hand Inventory (Sh.4,700,000 from Kitale Sports Dealers) 830 Sh.'000' 370 19,100 3,000 15,230 71,860 13,410 470 33,350 Panter Ltd. Applies a uniform gross profit margin of 40% on all sales except for goods purchased from Kitale Sports Dealers, where a 15% gross profit margin is charged. During the year,the cost of goods purchased from Kitale Sports Dealers was sh.37 million. The loan from Len carried interest at the rate of 12% per annum. Panter Limited had paid sh.400,000 from the cash in hand as part of the interest payment. The sale of old stock related to goods which had been included in the opening inventory. These goods were sold at 20% below the normal selling price and all the receipts were in cash. During the year, all the motor vehicles were replaced with new ones. The new motor vehicles cost sh. 29 milion and were traded in with old motor vehicle at their book values. Required: (a) Income statements for the year ended 30 September 2005. (b) Balance sheet Depreciation on motor vehicles and fixtures and fittings is to be provided on reducing balance at the rate of 20 per cent per annum. Full year's charge is to be made in the year of purchase and none in the year of disposal. Panter limited owed sh.710,000 for wages and sh.1,130,000 for motor vehicle expenses. Tax of Sh.10 million should be provided for. (12 marks) (8 marks) Panter limited is a medium-sized company engaged in the business of selling sports accessories. The business premises are rented for sh.8 million per annum. During the year ended 30 September 2005, the book keeper maintained incomplete records and some information was lost. However, the balances availed as at 30 September 2004 were as follows: Authorised, issued and fully paid Ordinary shares of sh.10 each Retained profit Accounts payable: Trade Other 1 2 3 4 5 6 7 8 9 10 An examination of panter's books of account for the year ended 30 September 2005 revealed the following: Amounts banked: sh.000 Repairs. Sundry expenses 30,000 27,500 Payments by cheque: Purchase of inventory Wages Rent Motor vehicle expenses Purchase of: Motor vehicles Cash in hand Loan from Len Ltd. (1 January 2005) Sale of old stocks Other collections Wages Motor vehicle expenses Sundry expenses 14,000 360 71,860 Fixture and fittings Accounts payable: Sh.000 Motor vehicles (net book value) 12,000 Fixtures and fittings (net book value 4,000 Inventory 20,000 Accounts receivable. 16,800 Prepayments - rent Cash at bank Trade Other Sh.'000' 5,000 12,000 214,170 231,170 234.250 Amounts paid out from the cash before bankings were made: Sh.'000' Sh.'000' 162,040 21,220 7,500 12,140 15,000 5,000 5,220 6,130 5,160 830 750 6,740 The following closing balances were ascertained as at 30 September 2005. Cash in hand Inventory (Sh.4,700,000 from Kitale Sports Dealers) 830 Sh.'000' 370 19,100 3,000 15,230 71,860 13,410 470 33,350 Panter Ltd. Applies a uniform gross profit margin of 40% on all sales except for goods purchased from Kitale Sports Dealers, where a 15% gross profit margin is charged. During the year,the cost of goods purchased from Kitale Sports Dealers was sh.37 million. The loan from Len carried interest at the rate of 12% per annum. Panter Limited had paid sh.400,000 from the cash in hand as part of the interest payment. The sale of old stock related to goods which had been included in the opening inventory. These goods were sold at 20% below the normal selling price and all the receipts were in cash. During the year, all the motor vehicles were replaced with new ones. The new motor vehicles cost sh. 29 milion and were traded in with old motor vehicle at their book values. Required: (a) Income statements for the year ended 30 September 2005. (b) Balance sheet Depreciation on motor vehicles and fixtures and fittings is to be provided on reducing balance at the rate of 20 per cent per annum. Full year's charge is to be made in the year of purchase and none in the year of disposal. Panter limited owed sh.710,000 for wages and sh.1,130,000 for motor vehicle expenses. Tax of Sh.10 million should be provided for. (12 marks) (8 marks)

Answer rating: 100% (QA)

The detailed ... View the full answer