Question two

The book$-$keeper of B$.$ Ltd$.$ prepared the following trial balance as at $31$ December $2023$:

Sh$.000$ Sh$.000$

Ordinary shares @ $20$ each $100,000$

Share premium $50,000$

Retained profits as at $1$ January $2023100,000$

$10\%$ debentures $100,000$

Stock $200,000$

Motor vehicles $100,000$

Provision for depreciation a$-$ motor vehicles $60,000$

Machinery $120,000$

Provision for depreciation $$ machinery $50,000$

Buildings at cost $230,000$

Provision for depreciation on buildings

Sales $70,000$

$750,000$

Purchases $350,000$

Discounts $2,000$

Returns $2,000$

Carriage $72,000$

Rates $200,000$

Advertising $10,000$

Creditors $200,000$

Debtors $200,000$

Provision for doubtful debts $6,000$

Debenture interest $5,000$

Cash at bank $\_\_\_\_\_\_\_\_\_\_5,000$

$1,491,0001,491,000$

Additional information:

$1.$ Rates are prepaid up to Sh$\mathrm{.}1,20,000.$

$2.$ Advertisement is accrued by sh$\mathrm{.}40,000.$

$3.$ Write off $5\%$ as bad debts.

$4.$ Create a general provision for bad debts at the rate of $2\mathrm{.}5\%$

$5.$ Directors have declared a dividend of $75$ cents per share.

$6.$ Stock as at $31$ December $2023$ is valued at Sh$\mathrm{.}180,000,000$

$7.$ Depreciation is at the rate of $12\%$ on cost for motor vehicles,$10\%$ on buildings on cost and at the rate of $8\%$ on reducing balance basis for machinery.

$8.$ A motor vehicle whose original cost was $2800,000$ was disposed on $14$th June $2023$ for sh$\mathrm{.}2500,000.$The accumulated depreciation on this vehicle was sh$\mathrm{.}170,000$

$9.$ On $10$th October $2023$ the buildings were revalued to sh$\mathrm{.}370,000,000.$

$10.$ Transfer $5\%$ of the profits to general reserve.

$11.$ Tax is at the rate of $30\%.$

Required:

$($a$)$ Income statement for the year ended $31$ December $2023.$

$($b$)$ Balance sheet as at $31$ December $2023.$