GWR Ltd started in business on 1 January 19X6. Its issued share capital was 100,000 ordinary shares of £1 each and 50,000 10 per cent preference shares of £1 each.

Its net profits for the first two years of business were: 19X6 £42,005; 19X7 £34,831.

Preference dividends were paid for each of these years, whilst ordinary dividends were proposed as 19X6 12 per cent and 19X7 9 per cent.

Corporation tax, based on the profits of these two years, was: 19X6 £13,480; 19X7 £11,114.

Transfers to general reserve took place as: 19X6 £6,000; 19X7 £4,000.

Draw up profit and loss appropriation accounts for each of the years ended 31 December 19X6 and 19X7.