QUESTION $150$ MARKS TOTAL Kanate Ltd has presented you with the following balances for the year ended December $31,2024$: $ $ Creditors $22,500$ Sales Revenue $1,148,200$ Land at cost $550,000$ Building at cost $570,000$ Furniture and fittings at cost $85,000$ Bank $9,500$ Provision for Depreciation Buildings $120,000$ Furniture and fittings $15,000$ Discounts $5,7005,800$ Retained Earnings at $1$ Jan $202414,800$ Provision for bad debts $2,200$ Goodwill $400,000$ Cash $16,400$ Inventory at $1$ Jan $202448,000$ Rent Received $($from Salibo Ltd$)45,000$ Rent $7,900$ Wages and Salaries $122,000$ Insurance $16,300$ Carriage Inwards $2,300$ Returns $8,50012,000$ Commission received $5,2008\%$ Mortgage $100,000$ Other Operating Expenses $2,500$ Debtors $45,000$ Purchases $340,000$ Debenture Interest $1,200$ Mortgage Interest $4,600$ Bad debt $4,7007\%$ Debentures $150,0004\%$ Preference Shares @ $$0\mathrm{.}5130,000$ Ordinary Shares @ $$0\mathrm{.}75375,000$ General Reserves $109,000$ Interim ordinary dividends paid $4,500$ QUESTION $150$ MARKS TOTAL Kanate Ltd has presented you with the following balances for the year ended December $31,2024$: $ $ Creditors $22,500$ Sales Revenue $1,148,200$ Land at cost $550,000$ Building at cost $570,000$ Furniture and fittings at cost $85,000$ Bank $9,500$ Provision for Depreciation Buildings $120,000$ Furniture and fittings $15,000$ Discounts $5,7005,800$ Retained Earnings at $1$ Jan $202414,800$ Provision for bad debts $2,200$ Goodwill $400,000$ Cash $16,400$ Inventory at $1$ Jan $202448,000$ Rent Received $($from Salibo Ltd$)45,000$ Rent $7,900$ Wages and Salaries $122,000$ Insurance $16,300$ Carriage Inwards $2,300$ Returns $8,50012,000$ Commission received $5,2008\%$ Mortgage $100,000$ Other Operating Expenses $2,500$ Debtors $45,000$ Purchases $340,000$ Debenture Interest $1,200$ Mortgage Interest $4,600$ Bad debt $4,7007\%$ Debentures $150,0004\%$ Preference Shares @ $$0\mathrm{.}5130,000$ Ordinary Shares @ $$0\mathrm{.}75375,000$ General Reserves $109,000$ Interim ordinary dividends paid $4,5002,249,4002,249,400$ The following additional information is available: $1.$ At December $31,2024$ closing inventory was $$52,0002.$ The Accountant has determined that the estimate for the provision for bad debts at December $31,2024$ is $10\%$ of debtors. $3.$ At the end of the period it was discovered that one employee was owed $$3,000$ in salaries while another was overpaid by $$5,000.$ Additionally insurance prepaid was $$1,3004.$ The following appropriation of the expenses must be made Admin Selling & Dist Rent $80\%20\%$ Wages & Salaries $60\%40\%$ Insurance $50\%50\%$ Prov. for Depreciation $70\%30\%5.$ On September $1,2024$ the company rented some of its office space to Salibo Ltd$.$ At that date Salibo Ltd paid rent covering the next nine months. $6.$ Depreciation should be provided as follows: Land Nil Buildings $2$ percent per year on cost Furniture & Fittings $20$ percent per year on reducing balance $7.$ Goodwill impairment was estimated to be $20\%.8.$ Corporation tax is estimated to be $$85,0009.$ The directors proposed on December $20,2024$ to pay the final preference dividends. At a board of directors meeting on January $3,2025$ the directors evaluated the performance of the business over the past financial year and proposed to pay a further $6\%$ ordinary dividend. Required: $($a$)$ Prepare the following for Kanate Ltd for the financial year ending December $31,2024$: i$.$ Statement of Profit or Loss $(15$ marks$)$ ii$.$ Statement of changes in equity $(5$ marks$)$ iii. Statement of Financial Position. $(10$ marks$)($b$)$ Calculate the following ratios for Kanate Ltd: i$.$ Current ratio ii$.$ Gearing ratio iii. Debt to Equity ratio iv$.$ Return on capital employed v$.$ Return on shareholders$$ equity $(5$ marks$)($c$)$ Write a report to management on the Liquidity, Solvency, and Profitability of Kanate Ltd relative to the industry$$s performance below: Current ratio $1\mathrm{.}4$ : $1$ Gearing ratio $35\%$ Debt to Equity $0\mathrm{.}45$ : $1$ Return on capital employed $35\%$ Return on shareholders' equity $40\%$