(a) The following balances have been extracted from the books of Safed Limited as at 30 September 19_4:

Required:
The Profit and Loss Account for the year ended 30 September 1984 and a Balance Sheet as at that date, in accordance with the Companies Acts, in so far as the available information permits.

(b) Examine the accounts you have prepared in

(a) and then answer the questions below:
(i) How did the Share Premium Account arise?
(ii) How could the goodwill acount have arisen?
(iii) Which of the reserves are capital reserves and which are revenue reserves, and what, in principle, is the difference between the two?

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Creditors Sales Land at cost Buildings at cost Furniture and fittings at cost Bank (credit balance) Depreciation: buildings furniture and fittings Discounts received Unappropriated profit at 1 October 19_3 Provision for doubtful debts 6.300 80 000 18 000 38 000 22 000 6.000 6.000 10.000 1 764 2000 Goodwill Cash in hand Stock at 1 October 19_3 Interim dividend on preference shares 816 16 400 232 14 248 600 2 124 Rates Wages and Salaries Insurance Returns inward General expenses Debtors Purchases Debenture interest Bad Debts 5% Debentures 6% 1 Preference Shares 1 Ordinary Shares General Reserve Share Premium 8 000 1896 372 436 12 640 43 856 400 676 16.000 20 000 20 000 10 000 1.000