The Chief Accountant of KK Ltd has extracted the following trial balance as at 31 Oct
ober 2018.
Sh.'000'
Sh.'000'
Authorized and issued capital (shares of Sh. 20 eac
30.000
paid)
350
Share premium
3.500
10% premium
2.000
General reserve
2.850
Profit and loss account 1 November 2017
3.500
Motor vehicles at cost
265
Provision for depreciation
44.500
Freehold property
1.375
Trade debtors
460
Trade creditor
95.650
127.450
Purchases and sales
3.478
Stock in hand 1 November 2017
1.540
Furniture and fittings at cost
138
Provision for depreciation
500
Goodwill
385
Rent receivable
2.285
Salaries and wages
358
General expenses
2.470
Vehicles runnina expenses
124
Bad debts
568
Telephone and postage
269
Water and electricity
289
Rates and insurance
10.492
Cash at bank
167,398
167,398
Notes:
1. Credit sales amounting to Sh.165,000 were made on 31 October 2018 but no
entries were made in the books.
2. Returns outwards amounting to Sh.128,000 were dispatched on 31 October 201
8 but no entries were made in the books.
3. Closing stock was valued at Sh.4, 398,000.
4. Accrued salaries and telephone bills amounted to Sh.134,000 and Sh.
55,000 respectively.
5. Rent for the month of October 2018 amounting to Sh.35,000 had not been receiv
ed from the tenant.
6. Provision for depreciation on furniture and fittings and the motor vehicles are 1
0% and 20% on cost respectively.
7. Provision for bad and doubtful debts of 5% on trade debtors should be made.
8. Corporation tax should be provided at 35% of the net profit before tax.
9. The directors propose a dividend of 15% on issued share capital and a transfer o
f Sh.2,500,000 to the general reserve.
10. The debenture interest has not yet been paid.
Required:
1. Trading, profit and loss account for the year ended 31 October 2018. (10 Marks)
2. Balance sheet as at 31 October 2008.
(5 Marks)

​