Corporation tax for the tax years 2007, 2008, and 2009 was 40% and income tax for each year was 20%.

(A) Skim Ltd’s draft income statement for the year ending 31 December 2008 shows a net trading profit from operations of £1.2 million. This figure is before taking into account (B) and (C1)

and (C2).

(B) Loan-note interest paid on 5 December 2008 (gross) was £200,000. Ignore accruals.

(C1) Fixed rate interest received is £60,000 (net). Date received 9 November 2008. Ignore accruals.

(C2) A dividend of £2,000 was received from Beef Ltd on 1 October.

(D) Depreciation was £180,000. This compares with £260,000 capital allowances given by Revenue and Customs. There is to be full provision for all timing differences for 2008.

(E) The income tax bill (net) in respect of (B) and (C1) was paid on 19 December 2008.

(F) Preference dividend paid on 6 July 2008 £32,000.

(G) Ordinary interim dividend paid 8 August 2008 £180,000.

(H) Proposed final ordinary dividend for 2008 (paid in 2009) was £300,000.

(I) | Proposed final ordinary dividend for 2007 (paid 10 March 2008) was £240,000.

(J) There was a credit balance on deferred taxation account at 31 December 2007 of £170,000.

(K) Tax for 2007 had been provided for at £280,000 but was finally agreed at £272,000 (paid on 6 October 2008).

(L) Corporation tax for 2008 is estimated to be £340,000.

You are required to enter up the following accounts for the year ended 31 December 2008 for Skim Ltd: Deferred tax; Income tax; Interest receivable; Loan-note interest; Investment income; Corporation tax; Preference dividends; Ordinary dividends; Income statement extract. Also prepare the relevant balance sheet extracts as at 31 December 2008.