Description

Legal Practice Management

1. Tom and Mark Advocates have been in practice for several years. They share profits and losses equally.

Their summarized financial statements for the year ended 30th September 2009 are as follows:

Tom and Mark Advocates

Balance Sheet as of 30th September 2009

 

Fixed Assets		Shs ‘000’	Shs ‘000’
Furniture and Fittings		96
Equipment		284
Motor Vehicles		1,504
Investment in NSE Current Assets			3,000
Outstanding fees	480
Cash at Bank – Office	1,212
-Client Current Liabilities		1,820
Clients Account	128
Accrued Rent	136

Accrued Salaries                                                      132        (396)

Capital Accounts

Tom                                                                                                                             3,308

Mark                                                                                                                            3,000

6,308

Receipts and Payments Accounts

For The Year Ended 30th September 2010

Receipts	Shs. ‘000’	Payments	Shs.’OOO’
Fees for Services Rendered	3,552	Equipment purchased	596
Clients deposit for land buying	1,536	Drawings:
Clients deposit for a criminal case	1,296	Tom	300
Received from clients for disbursements:		Mark	300
Stationery	48	Deposit on land
Transport	60	Purchase contract for Client	920
Miscellaneous	92	Transport	224
		Office Rent	896
		Telephone and Postage	292
		Printing & Stationery	152
		Motor Vehicle Expenses	392
		Water and Electricity	140
		Office Repairs	72
		Salaries and Wages	960
		Miscellaneous expenses	208

5,452

Additional Information

Depreciation is to be provided for reducing balance at 121/29/0 for furniture, 15% for equipment, and 25% for motor vehicles.

• Fees in arrears at the year-end were Kshs.1,280,000. The Advocates have agreed to create a reserve against the fees in arrears.
• During the year, the criminal case client was defended in court. The Advocate raised an interim note for Kshs.500,000 but no entries have been made in the books.
• Disbursements for stationery, transport,  and miscellaneous expenses, Kshs.4,000 have been charged to the clients’ account.
• Accrued expenses were Kshs.20, OOO, Kshs. 108,000 and Kshs.112,000 for telephone, rent, and salaries respectively.

Required:

(a)         The Advocates’ income and expenditure account for the year ended 30th September 2010.

(5 Marks) (b) The client’s account(s) for the same period.

(5 marks)

(c)       Balance Sheet as at 30th September, 2010

ATP 106 Legal Practice Management r 2014-1