Question:
Long Acre Ltd has just finished its second year of trading to 31 December 19X4.
Balances per 11.1 need to be brought forward into this question. Tax rates are the same as for 19X3.
The following information is available:
You are required to:
(a) Draw up the double entry accounts recording the above (except bank).
(b) Show the relevant extracts from the profit and loss account for the year and balance sheet at the year end.
Transcribed Image Text:
(i) The proposed final dividend for 19X3 (see 11.1) was paid on 31 January 19X4. (ii) ACT on (i) was paid on 31 March 19X4. (iii) Shares in Covent Ltd were bought on 1 January 19X4. A dividend of 2,400 (excluding tax credits) was received on 30 September 19X4. This is franked investment income. (iv) Debentures in Covent Ltd were bought 1 July 19X4. Debenture interest of 7,200 (net) was paid to us on 31 December 19X4. (v) Debenture interest of 9,600 (net) was paid by us on 31 December 19X4. (vi) Income tax owing to the Inland Revenue for 19X4 was not paid by us until 19X5. The 19X3 income tax had been paid on 30 January 19X4. (vii) An interim dividend of 71/2 per cent on 400,000 1 ordinary shares was paid by us on 10 July 19X4. (viii) ACT on (vii) was paid by us on 10 October 19X4. (ix) A final dividend of 1712 per cent was proposed for the year. (x) Depreciation of 70,000 was charged in the accounts. Capital allowances amounted to 96,000. (xi) Net trading profit (before taking into account (iii), (iv), and (v)) was 360,000. (xii) The corporation tax due for 19X3 was paid on 1 October 19X4. Corporation tax for the year to 31 December 19X4 is expected to be 95,000.