QUESTION

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The following trial balance was extracted from the books of Rose Martins, a sole trader on 31 December 2019. Sh. Capital Freehold land and buildings at cost Motor vehicles at cost Furniture and fittings at cost Stock at 1 January 2019 Purchases and sales Debtors and creditors Discounts allowed and received Returns inwards and outwards Rent received Loan (interest payable $5 \%$ per annum) Interest on loan Proceeds of sale of motor vehicle Provision for doubtful debts Baddebts Wages and salaries Drawings General expenses Bankbalance Rates and insurance Provisions for depreciation: Furniture and fittings Motor vehicle Additional Notes: \begin{tabular}{rr} Sh. & \multicolumn{1}{c}{ Sh. } \\ $1,120,000$ & $2,880,000$ \\ $1,094,000$ & \\ 240,000 & \\ 960,000 & \\ $9,408,000$ & $11,088,000$ \\ 936,000 & 695,200 \\ 195,200 & 119,200 \\ 16,000 & 28,800 \\ & 44,000 \\ 4,800 & 192,000 \\ & 150,000 \\ 52,000 & 27,200 \\ $1,127,200$ & \\ 256,000 & \\ 138,400 & 160,000 \\ 108,800 & 320,000 \\ 48,000 & $15,704,400$ \\ & \end{tabular} a) Stock at 31 December 2019 was valued at Sh. 1,360,000. b) As at 31 December 2019, wages and salaries outstanding amounted to Sh. 66,400. c) Prepaid rates and insurance as at 31 December 2019 stood at Sh. 12,000. d) Interest paid is only a half of the amount due for the year ended 31 December 2019. e) Provision for doubtful debts is to be adjusted to $5 \%$ of the debtors. f) Depreciation is to be provided for as follows: - $\quad$ Furniture and fittings at $5 \%$ on reducing balance method - Motor vehicles at $20 \%$ on straight line method a) Required: i) Statement of profit or loss for the year ended 31 December 2019. (8 Marks) ii) Statement of financial position as at 31 December 2019. (7 Marks)

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