The following summarized information relates to Cliff Ltd

During Year 5 machinery with book value of £12 000 was sold and replaced by new machinery. No property was sold. No dividends were paid or proposed but shareholders all accepted a capitalization issue of ‘one for five’ and then subscribed in full for a rights issue of ‘one for six’ at par.
Required: A Statement of Source and Application of Funds for Year 5 in good style.

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Profit and Loss Account Ended 31 December Year 5 000 000 Turnover 456 Less Depreciation of machinery 18 Other costs 450 468 12 Profit on sale of machinery 4 Net loss 8 Balance Sheets as at 31 December Year 4 Year 5 000 000 Issued Ordinary 1 Shares 300 420 Share Premium 146 86 Property revaluation reserve - 35 Profit & Loss Account 47 39 Trade creditors 23 37 Bank overdraft 3 519 617 Freehold property at cost 130 12 Freehold property at revaluation - 165 Machinery 37 42 Stocks 233 243 Debtors 119 117 Bank 38 - 519 617