Question 1

The following is the statement of financial position of Awah and Sons Ltd as at 31 December 2018: (Values are in Rwf Millions)

Statement of financial position as at 31 December 2018

Rwf

ASSETS

Non-current assets:

Machinery 25,300

Current assets:

Inventories 12,200

Trade receivables 21,300

Prepaid expenses (rates) 400

Cash 8,300

42,200

Total assets 67,500

EQUITY AND LIABILITIES

Equity

Original 25,000

Retained earnings 23,900

48,900

Current liabilities:

Trade payables 16,900

Accrued expenses (wages) 1,700

18,600

Total equity and liabilities 67,500

During 2019, the following transactions took place:

1. The owners withdrew equity in the form of cash of Rwf23,000 for personal use.
2. Premises were rented at an annual rental of Rwf20,000. During the year, rent of Rwf25,000 was paid to the owner of the premises.
3. Rates on the premises were paid during the year for the period 1 April 2019 to 31 March 2020 and amounted to Rwf2,000.
4. Some machinery (a non-current asset), which was bought on 1 January 2018 for Rwf13,000, has proved to be unsatisfactory. It was part-exchanged for some new machinery on 1 January 2019 and Awah and Sons Ltd paid a cash amount of Rwf6,000. The new machinery would have cost Rwf15,000 had the business bought it without the trade-in.
5. Wages totalling Rwf23,800 were paid during the year. At the end of the year, the business owed Rwf860 in wages.
6. Electricity bills for the four quarters of the year were paid a total of Rwf2,700 per year.
7. Inventories totalling Rwf143,000 were bought on credit.
8. Inventories totalling Rwf12,000 were bought for cash.
9. Sales revenue on credit totalled Rwf211,000 (cost Rwf127,000).
10. Cash sales revenue totalled Rwf42,000 (cost Rwf25,000).
11. Receipts from trade receivables totalled Rwf198,000.
12. Payments to trade payables totalled Rwf156,000.
13. Van running expenses paid totalled Rwf17,500.

Note

The business uses the reducing-balance method of depreciation for non-current assets at a rate of 30 per cent each year.

Tax Rate = 30%

Required:

Prepare a statement of financial position as at 31 December 2019 and an income statement for the year to that date.