12.10 The following trial balance has been extracted from the ledgers of JK Ltd at 31 March 1993:

£ £

Sales (all on credit) 647,400 Stock (1 April 1992) 15,400 Trade debtors and creditors 82,851 41,936 Purchases (all on credit) 321,874 Carriage in 13,256 Carriage out 32,460 Electricity 6,994 Business rates 8,940 Wages and salaries 138,292 Postage and stationery 6,984 Rent 14,600 VAT control 16,382 PAYE control 4,736 Motor vehicles: at cost 49,400 depreciation 21,240 Bank deposit account 90,000 Bank current account 77,240 Ordinary shares of £1 each 50,000 Profit and loss – unappropriated profit 76,597 858,291 858,291 The following notes are also relevant:

(i) Stock at 31 March 1993, valued at cost, was £19,473.

(ii) Prepaid rent amounted to £2,800.

(iii) Accruals are estimated as follows:
£
Electricity 946 Wages and salaries 2,464 (iv) Depreciation on motor vehicles is to be provided at 25 per cent per annum using the reducing balance method.
(v) Accrued interest on the bank deposit account amounts to £7,200.
(vi) A provision for corporation tax of £30,000 is to be made on the profits of the year.
(vii) No interim dividend was paid but the directors propose a final dividend of £0.05 per share.

(a) Prepare JK Ltd’s trading, profit and loss and appropriation account for the year ended 31 March 1993, in vertical format. (10 marks)

(b) Prepare JK Ltd’s balance sheet at 31 March 1993, in vertical format. (7 marks)

(c) Calculate and comment briefly on the debtors’ and creditors’ payment periods and the stockholding period of JK Ltd. (10 marks)
(Total: 27 marks)
(CIMA, Accounting, May 1993)