LB Ltd had the following recent balance sheet as at 30 September 2016: 1. Why is 'land'

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LB Ltd had the following recent balance sheet as at 30 September 2016:

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1. Why is 'land' on the balance sheet, and what does it represent?
2. On 5 October 2016, the company borrowed $2410 from the bank and used the money immediately to buy more land. What was the total dollar figure of the company's assets after this point?
3. Why did the company not just use the $3500 share capital to buy more land instead of borrowing from the bank?
4. Explain what 'retained profits' represents.
5. For the year ended 30 September 2016, the company's revenues were $10 116 and its expenses (including income tax) were $9881. During the year ended 30 September 2016, the company declared dividends of $120. What was the balance in retained profits at the beginning of that year (1 October 2015)?
6. If the 2016 expenses were $11 600 instead of the figure in point 5, and the company did not declare any dividends, what would the retained profits be at 30 September 2016? How would you interpret this number?

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Financial Accounting An Integrated Approach

ISBN: 9780170349680

6th Edition

Authors: Ken Trotman, Michael Gibbins, Elizabeth Carson

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