Description

Legal Practice Management

PART A:

1. Juma and Company Advocates a law firm operating in an upcountry town had the following balance sheet as at June 2013

Assets Non-Current Assets	Shs’OOO	Shs’OOO
Equipment	800
Furniture	350
Library Books Current Assets	280	1430
Work in progress	210
Stationery	140
Debtors fees and disbursements	330
Cash at Bank: Office	300
Client	250	1230 2660
Capital		1800
Loan		500
Creditors	110
Clients — for money held on behalf	250	360

2600

The following transactions were carried out by Juma and company in the year ending June 2014:

1. Received 850,000 on behalf of client ii. Spent the amounts below on behalf of client who had sufficient cash held by the firm:

Shs’OOO

• Purchase of equipment	260
• Payment of rent	130
• Payment of repairs cost	80

iii. Purchased new equipment for office use for shs.400,000 and paid shs.1()0,000 cash, the balance remaining as loan

Spent shs.350,000 on the purchase of land on behalf of a client who had a credit balance of shs.120,00() with the firm.

Charged clients shs.1,050,000 for services rendered in the year ended 30 June 2014. vi. Received shs.68(),00() from client settlement of amounts due for services rendered. The firm received nothing from clients and had to transfer shs.240,()00 from the clients account to the office accounts in settlements of amounts due to the firm

• The following expenses were incurred by the firm in the year 30^th June 2014 all settled in cash:

Shs.’000

Rent	120
Salaries and wages	360
Office furniture	90
Interest on loan	30
Loan repayment	300

• During the year, the firm received shs.480,000 from clients as settlement of disbursements made on their behalf.

1. Purchased library books worth 160,000 and paid for them in cash
2. Purchased stationary on credit for shs.210,000 and paid the creditors a total of 240,000 in the year ended 30^th June 2014 xi. Drawings for personal use in the year ended 2014 amounted to shs.180,000 xii. On 30 June 2014, stationary in the store was valued at 160,000. On the same date, work in progress not yet charged to clients was valued at shs.350,000 xiii. The firm provides depreciation at the following rates based on book value:

• Equipment 5%p.a.
• Furniture 10% p.a.

Prepare Income Statement and Balance Sheet as at                  2014. 2.          The trial balance of Matt Spode, a China Wholesaler had the following:

(15 marks)

 

ATP 106 Legal Practice Management 2015-1-2