Self-test Delta Furnishing Ltd Trial balance – 31 December 2009 Bad debts 700 Provision for bad debts 1st January 2009 250 Profit and loss account 1 January 2009 43,000 Stock – 1 January 2009 18,800 Freehold property – at cost 180,850 Creditors 24,640 Ordinary share capital – fully paid 90,000 Furniture and fittings – at cost 24,000 Debtors 5,000 Sales 199,000 Purchases 80,200 Carriage outwards 9,240 Office expenses 12,400 Advertising 12,940 10 per cent debentures 18,000 Debenture interest paid 1,800 Rates and insurance 1,760 Cash in hand 300 Cash in bank 400 Provision for depreciation – furniture and fittings 19,000 Salaries and wages 45,500 393,890 393,890 You are required to prepare the trading and profit and loss account for Delta Furnishing Ltd for the year ended 31 December 2009 and the balance sheet on that date after taking into account the following adjustments:

(i) Stock − 31 December 2009 34,000

(ii) Salaries accrued 1,000

(iii) Rates prepaid 460

(iv) Provision for bad debts is to be reduced to 200

(v) Depreciation of 10 per cent p.a. on the cost furniture and fittings

(vi) A dividend of 3 per cent on ordinary share capital

(vii) Directors’ remuneration unpaid during the year is now due 2,000 The company has an authorised capital of 10,000 6 per cent preference shares of

£1 each and 100,000 ordinary shares of £1 each.