(vii) A term used to refer to record a decrease in expenses (7 marks) Total: 18 Marks Question Twa Sombie Datoo operates an Exotic fish pond construction busioess ealled Mandhari Enterprise. Some clients are required to pay in advance for the services, while others are billed after the services have been rendered. Advance payments are credited to an account entitled Uneared Fees, which represents unearned revenue. The besiness adjusts its aceounts and closes its accounts at the end of each quarter. At December 31, 2022 the end of the second quarter of the year, the unadjusted trial balance appeared as follows: (a) The depreciation expense with respect to Construction equipment for the quarter was estimated at Ksh.85,000. (b) The unearned fees account includes fees of Kah 840,000 eamed during the moeth of December by performing services for clieats who had paid in advance. (c) Salaries earned by employees during the month of December but not yet recorded or paid amounted to Ksh. 167,000 . (d) The peepaid reat amount represents three months" reat paid in advance on December 1 . (c) Fish pond construction services rendered during the month of December bet not yet collected or billed to clients amounted to Ksh 390,000 (f) Fish pond supplies on hand on December 31 amounted to Kh. 70,000 Required: (i) Prepare the adjusting entries required at December 31, 2022 (12 marks) (ii) Prepare the Statement of income for Mandhari Enterprise for the period ended December 31, 2022 (I1 marks) (iii) Prepare the Statement of financial position for Mandhari Enterprise as at December 31,2022 Total: 34 marks Question Three (a) Differentiate between permanent accounts and temporary accounts. (5 marks) (b) The followiag adjusted trial balance as at year-end relates to Suluhia Enterprise, a sole proprietorship: Suluhla Enterprise Adjusted Trial Balance A s at Daremher 31.2022 The ending inventory as at the December 31, 2022 stood at Ksh. 22,400,000 Required: Prepare the necessary year-end closing entries for Suluhia Enterprise, (20 marks) Total: 25 Marks Question Four (a) Explain the term "depreciation" in the context of financial accounting (3 marks) (b) Explain the objectives of providing for depreciation in the books of account. (4 marks) (c) Isaac Corporation purchased a machine at the beginning of year 1 for Kah. 570,000 , terms 5/10,2/30, n/60, FOB Shipping point. Payment was made within the first 20 days. Isaac paid for freight charges amounting to Ksh. 13,500. The machine required a special steel mounting and power connections costing Ksh 34,800 and another Ksh. 12,250 was paid to assemble the machine and get it into operation. In moving the machine onto its steel mounting, it was dropped and damaged. The repairs cost Ksh. 5,300 . Required: (i) Prepare a calculation to sbow the cost of the machine (6 marks) (ii) Assuming that the machine was depreciated at the nate of 20% under the reducing balance method, calculate the depreciation charge for year 2 in respect of the machine. (7 marks) (iii) At what value does an item of property, plant and equipmeat appear on the statement of financial position (3 marks) Total: 23 marks