1. **Problem Statement:** Prepare the Income Statement for Makonde Railways Ltd for the year ended 31 December 2025. 2. **Formula and Rules:** - Income Statement calculates Net Profit = Total Revenue - Total Expenses. - Depreciation is calculated using straight-line method: $$\text{Depreciation} = \text{Cost} \times \text{Rate}$$ - Adjust expenses for accrued and prepaid amounts. 3. **Calculate Depreciation:** - Locomotives depreciation = $$3,600,000,000 \times 10\% = 360,000,000$$ - Rail tracks depreciation = $$5,200,000,000 \times 5\% = 260,000,000$$ 4. **Calculate Total Revenue:** - Passenger revenue = 1,480,000,000 - Freight revenue = 2,250,000,000 - Total Revenue = $$1,480,000,000 + 2,250,000,000 = 3,730,000,000$$ 5. **Calculate Total Expenses:** - Locomotive fuel expenses = 610,000,000 - Staff wages and salaries = 820,000,000 + accrued wages 40,000,000 = 860,000,000 - Track maintenance expenses = 540,000,000 - Administrative expenses = 195,000,000 - Interest on loan = 75,000,000 - Railway station operating costs = 310,000,000 - prepaid 25,000,000 = 285,000,000 - Depreciation (locomotives + rail tracks) = 360,000,000 + 260,000,000 = 620,000,000 - Total Expenses = $$610,000,000 + 860,000,000 + 540,000,000 + 195,000,000 + 75,000,000 + 285,000,000 + 620,000,000 = 3,185,000,000$$ 6. **Calculate Net Profit:** - Net Profit = Total Revenue - Total Expenses = $$3,730,000,000 - 3,185,000,000 = 545,000,000$$ --- 1. **Problem Statement:** Prepare the Statement of Financial Position as at 31 December 2025. 2. **Formula and Rules:** - Assets = Liabilities + Equity - Calculate net book values for assets by subtracting accumulated depreciation and current year depreciation. - Adjust for accrued and prepaid amounts. 3. **Calculate Net Book Values:** - Locomotives net book value = Cost - (Accumulated depreciation + current year depreciation) = $$3,600,000,000 - (1,440,000,000 + 360,000,000) = 1,800,000,000$$ - Rail tracks net book value = $$5,200,000,000 - (2,080,000,000 + 260,000,000) = 2,860,000,000$$ 4. **Calculate Current Assets:** - Accounts receivable = 430,000,000 - Inventory (spare parts) = 210,000,000 - Cash at bank = 325,000,000 - Prepaid station operating expenses = 25,000,000 - Total Current Assets = $$430,000,000 + 210,000,000 + 325,000,000 + 25,000,000 = 990,000,000$$ 5. **Calculate Total Assets:** - Total Assets = Net book value locomotives + Net book value rail tracks + Current Assets = $$1,800,000,000 + 2,860,000,000 + 990,000,000 = 5,650,000,000$$ 6. **Calculate Current Liabilities:** - Accounts payable = 355,000,000 - Accrued wages = 40,000,000 - Total Current Liabilities = $$355,000,000 + 40,000,000 = 395,000,000$$ 7. **Calculate Long-term Liabilities:** - Long-term loan = 1,850,000,000 8. **Calculate Equity:** - Share capital = 4,000,000,000 - Retained earnings (opening) = 600,000,000 - Add Net Profit = 545,000,000 - Total Equity = $$4,000,000,000 + 600,000,000 + 545,000,000 = 5,145,000,000$$ 9. **Check Balance:** - Liabilities + Equity = Current Liabilities + Long-term loan + Equity = $$395,000,000 + 1,850,000,000 + 5,145,000,000 = 7,390,000,000$$ - Total Assets = 5,650,000,000 (Mismatch indicates missing assets or adjustments; likely the locomotives and rail tracks net book values should be rechecked or other assets included.) **Note:** The mismatch suggests rechecking calculations or including other assets. However, based on given data, this is the prepared statement. --- **Final answers:** - **Net Profit for the year ended 31 December 2025:** $$545,000,000$$ - **Statement of Financial Position totals:** - Total Assets: $$5,650,000,000$$ - Total Liabilities and Equity: $$7,390,000,000$$ (indicates further reconciliation needed)