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Walter Kiragu started a transport business on 1 January 2004. The business’s purchases and disposal of motor vehicles over the subsequent period of three years were as follows:
Motor vehicle date of purchase Cost Date of disposal Proceeds on
Registration disposal
Number
Sh. Sh.
KAP 8610L 1 January 2004 2’500’000
KAP 9000R 1 January 2004 1’250’000 1 January 2006 450’000
KAQ 1000Q 1 January 2006 3’500’000

The business charges depreciation at the rate of 20% per annum calculated on the straight line basis. Walter Kiragu’s financial year ended 31 December.

Required:
(i) Motor vehicles account for each of the three years ended 31 December 2004, 2005 and 2006
(ii) Motor vehicle disposal account
(iii) Provision for depreciation on motor vehicles account for each of the three years ended 31 December 2004 2005 and 2006
iv)Extracts of profit and loss account and the balance sheet for 2004,2005,2006

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