a) Explain the 3 major reasons for business valuations. Discuss two major approaches which arefrequently used. (5 Marks)b) The directors of Upendo Plc were asked last year to improve their subdiary’s performance.Summarized financial data at that time for the subsidiary is shown below.Ksh 000Turnover 840Operating profit 95Interest 6Taxable profit 89Fixed assets 580Current assets 290Current liabilities 210Medium and long-term debt 40Shareholders’ equity 620Capital employed 660The results for the current year have just been announced as:Kshs. 000Turnover 1,000Operating profit 122Interest 187Taxable profit 104Fixed assets 680Current assets 350Current liabilities 260Medium and long-term debt 140Shareholders’ equity 630Capital employed 770RequiredAnalyse the performance of the subsidiary, and from the perspective of the future strategicdevelopment of Upendo Plc suggest what controls the directors of Upendo Plc might introduceto influence the future development of the subsidiary. (15 Marks)
Prepare journal entries from the following transactions and extract a trial balance July: 1 Started business with sh. 5,000 in bank and sh. 1,000 cash. 2 Bought stationery by cheque sh. 75 3 Bought goods on credit from smart sh. 2,100 4 Sold goods for cash sh. 340 5 Paid insurance by cash sh. 290 7 Bought a computer on credit from Hott. Sh. 700 8 Paid expenses by cheque sh. 32 10 Sold goods on credit to Biggins sh. 630 11 Returned goods to Smart sh. 550 14 Paid wages by cash. Sh. 210 17 Paid rent by cheque sh. 225 20 Received a cheque sh. 400 from Biggins 21 Paid Hott by cheque 700 23 Bought stationary on credit from News Ltd 125 31 Sod goods on credit to F Tank sh. 645.
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