10.1 The following trial balance was extracted from the accounts of Minto plc at 31 October 1986.

£ £

Called-up share capital 200,000 Share premium 100,000 12% debentures 225,000 Fixed assets at cost:

Freehold premises at cost 435,000 Machinery and equipment 60,000 Motor lorries 225,000 Provisions for depreciation to 1 November 1985:

Freehold premises 30,000 Machinery and equipment 24,000 Motor lorries 62,000 Sales 791,600 Discounts allowed 14,200 Discounts received 9,800 Purchases 458,200 Debtors and creditors 54,100 31,400 Provision for doubtful debts at 1 November 1985 3,700 Bad debts 2,900 Wages and salaries 68,400 Administrative expenses 32,800 Research and development expenditure 9,600 Debenture interest paid 13,500 Directors’ remuneration 40,000 Retained profits at 1 November 1985 115,200 Stock at 1 November 1985 113,400 Goodwill at cost 30,000 Bank balance 35,600 1,592,700 1,592,700 Additional information relevant to the year ended 31 October 1986 is as follows:
(i) Share capital is divided into 200,000 ordinary shares of £1 each and is all issued and fully paid.
(ii) Stock held at 31 October 1986 is detailed as follows:
Cost Net realizable value Category – small £36,200 £26,700 Category – large £47,800 £58,600 Category – magnum £56,300 £46,800 (iii) The provision for doubtful debts is to be increased to £4,500.
(iv) Provision is to be made for depreciation as to:
machinery and equipment at 10 per cent per annum of cost;
motor lorries at 20 per cent per annum of cost; and freehold premises – £6,000.
(v) Corporation tax on the profits of the year is to be provided for at £33,000.
(vi) Goodwill is to be amortized at 20 per cent of cost.
(vii) A machinery replacement reserve is to be created of £15,000.
(viii) An ordinary share dividend is proposed at the rate of 10p per share.
(ix) Wages and motor expenses accruals amount to £1,500 and £900, respectively.

(a) Trading and profit and loss account for the year ended 31 October 1986.
(15 marks)

(b) The balance sheet as on the above date in vertical format, and with appropriate subtotals. (10 marks)
(Total: 25 marks)
(ICSA, Introduction to Accounting, December, 1986)