Study the following accounts of two companies and then answer the questions which follow. Both companies are stores selling textile goods.

Trading and Profit and Loss Accounts R Ltd T Ltd

£ £ £ £

Sales 250,000 160,000 Less Cost of goods sold Opening stock 90,000 30,000 Add Purchases 210,000 120,000 300,000 150,000 Less Closing stock 110,000 190,000 50,000 100,000 Gross profit Less Expenses Wages and salaries 14,000 60,000 10,000 60,000 Directors’ remuneration 10,000 10,000 Other expenses 11,000 35,000 8,000 28,000 Net profit 25,000 32,000 Add Balance from last year 15,000 8,000 40,000 40,000 Less Appropriations General reserve 2,000 2,000 Dividend 25,000 27,000 20,000 22,000 Balance carried to next year 13,000 18,000 Balance sheets Fixed assets Equipment at cost 20,000 5,000 Less Depreciation to date 8,000 12,000 2,000 3,000 Motor lorries 30,000 20,000 Less Depreciation to date 12,000 18,000 7,000 13,000 30,000 16,000 Current assets Stock 110,000 50,000 Debtors 62,500 20,000 Bank 7,500 10,000 180,000 80,000 Less Current liabilities Creditors 90,000 16,000 90,000 64,000 120,000 80,000 Financed by:

Issued share capital 100,000 50,000 Reserves General reserve 7,000 12,000 Profit and loss 13,000 20,000 18,000 30,000 120,000 80,000