The following trial balance of X Limited, a non-listed company, has been extracted from the books after the preparation of the profit and loss account and various transfers from profit and loss for the year ending 31 March 2007.

You are also provided with the following information:
1. Investments The listed investments consist of shares in W plc quoted on the Stock Exchange at £180,000 on 31 March 2007. This is not considered to be a permanent fall in the value of this asset.
2. Trade debtors and prepayments The company received notice, during April 2007, that one of its major customers, Z Limited, had gone into liquidation. The amount included in trade debtors and prepayments is £225,000 and it is estimated that a dividend of 24p in the £ will be paid to unsecured creditors.
3. Taxation

(a) Corporation tax ; :
The figure in the trial balance is made up as follows:

(b) Deferred taxation ;
A transfer of £50,000 was made from the profit and loss account during the year ended 31 March 2007.

4. Tangible fixed assets

(a) In arriving at the profit for the year, depreciation of £242,000 was charged, made up of freehold properties £12,000, plant and machinery £150,000 and vehicles £80,000.

(b) During the year to 31 March 2007, new vehicles were purchased at a cost of £200,000.

(c) During March 2007, the directors sold one of the freehold properties which had originally cost £320,000 and which had a written-down value at the date of the sale of £280,000. A profit of £320,000 on the sale, which was regarded as exceptional, has already been dealt with in arriving at the profit for the year. The estimated corporation tax liability in respect of the capital gain will be £96,000, as shown in Note 3. After this sale, the directors decided to have the remaining freehold properties revalued, for the first time, by Messrs V & Co, Chartered Surveyors and to include the revalued figure of £1,040,000 in the 2007 accounts.

5. Research and development costs The company carries out research and development and accounts for it in accordance with the relevant accounting standard. The amount shown in the trial balance relates to development expenditure on a new product scheduled to be launched in April 2007. Management is confident that this new product will earn substantial profits for the company in the coming years.

6. Stocks The replacement cost of the finished goods, if valued at 31 March 2007, would amount to £342,000.
You are required to prepare a balance sheet at 31 March 2007 to conform to the requirements of the Companies Acts and relevant accounting standards in so far as the information given allows.
The vertical format must be used.
The notes necessary to accompany this statement should also be prepared.
Workings should be shown, but comparative figures are not required.

Transcribed Image Text:

000 000 Ordinary share capital - authorised, allotted and called-up fully paid shares of 1 each 12% debentures (repayable in 9 years) Deferred taxation Provisions for depreciation: 1,000 500 128 Plant and machinery at 31 March 2007 Freehold properties at 31 March 2007 Vehicles at 31 March 2007 Investments (listed), at cost Trade debtors and prepayments Corporation tax Proposed final dividend 650 52 135 200 825 270 280 Tangible fixed assets: Freehold properties at 31 March 2007 1,092 Plant and machinery at 31 March 2007 1,500 Vehicles at 31 March 2007 420 Profit and loss account - balance at 31 March 2007 356 Share premium account 150 Trade creditors and accruals 878 Research and development costs 35 Stocks: Raw materials 200 Work in progress 50 Finished goods 250 Bank balance 439 Revaluation reserve on freehold properties 612 5,011 5,011