The following trial balance has been extracted from the books of Patt ple as at 31 March
Question:
The following trial balance has been extracted from the books of Patt ple as at 31 March 19X0:
Additional information:
1 Following the preparation of the above trial balance, the following additional matters need to be taken into account:
(a) stock at 31 March 19X0 was valued at £170,000;
(b) at 31 March 19X0, £20,000 was owing for office expenses, and £15,000 had been paid in advance for marketing expenses;
(c) a customer had gone into liquidation owing the company £290,000; the company does not expect to recover any of this debt;
(d) the company decides to set up a provision for doubtful debts amounting to 5 per cent of the outstanding trade debtors as at the end of each financial year; and
(e) depreciation is to be charged on the fixed assets at a rate of 20 per cent on cost; it is to be apportioned as follows:
There were no acquisitions or disposals of fixed assets during the year to 31 March 19X0.
2 Corporation tax (based on the accounting profit for the year at a rate of 35 per cent) is estimated to be £160,000. The basic rate of income tax is assumed to be 25 per cent. The ACT rate is 20 per cent.
3. The directors are to recommend the payment of a dividend of 10p per ordinary share.
Required:
Insofar as the information permits, prepare Patt plc’s profit and loss account for the year to 31 March 19X0, and a balance sheet as at that date in accordance with the Companies Act 1985 and related accounting standards.
Notes:
(i) Where appropriate, formal notes should be attached to your profit and loss account and balance sheet. However, a statement of accounting policies is NOT required.
(ii) Detailed workings should also be submitted with your solution. They should be clearly designated as such, and they must not form part of your formal notes.
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