On 1 April 19X1 Machinery Limited bought 80 per cent of the ordinary share capital of Components Limited and on 1 April 19X3 Machinery Limited was itself taken over by Sales Limited who purchased 75 per cent of the ordinary shares in Machinery Limited.

The balance sheets of the three companies at 31 October 19X5 prepared for internal use showed the following position:

Additional information

(a) All ordinary shares are \(£ 1\) each, fully paid.

(b) Preference shares in Components Ltd are 50p each fully paid.

(c) Proposed dividends in Components Ltd are:
on ordinary shares \(£ 10,000\);
on preference shares \(£ 2,000\).

(d) Proposed dividends receivable by Sales Ltd and Machinery Ltd are included in debtors.

(e) All creditors are payable within one year.

(f) Items purchased by Machinery Ltd from Components Ltd and remaining in stock at 31 October 19X5 amounted to \(£ 25,000\). The profit element is 20 per cent of selling price for Components Ltd.
\((g)\) Depreciation policy of the group is to provide for:
(i) buildings - at the rate of 2 per cent on cost each year;(ii) plant and equipment - at the rate of 10 per cent on cost each year including full provision in the year of acquisition.
These policies are applied by all members of the group.
Included in the plant and equipment of Components Ltd is a machine purchased from the manufacturers, Machinery Ltd, on 1 January 19 X 4 for \(£ 10,000\). Machinery Ltd recorded a profit of \(£ 2,000\) on the sale of the machine.

(b) Intra-group balances are included in debtors and creditors respectively and are as follows:

(i) A cheque drawn by Sales Ltd for \(£ 11,300\) on 28 October 19 X 5 was received by Machinery Ltd on 3 November 19 XS.
(j) At 1 April 19X1, reserves in Machinery Ltd were \(£ 28,000\) and in Components Ltd \(£ 20,000\). At 1 April 19 X3 the figures were \(£ 40,000\) and \(£ 60,000\) respectively.
\section*{Required:}
Prepare a group balance sheet at 31 October 19X5 for Sales Ltd and its subsidiaries complying, so far as the information will allow, with the accounting requirements of the Companies Acts.

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Sales Ltd Machinery Ltd Components Ltd Fixed assets Freehold land at cost 89,000 30,000 65,000 Buildings at cost 100,000 120,000 40,000 Less: Accumulated depreciation 36,000 40,000 16,400 64,000 80,000 23,600 Plant and equipment at cost 102,900 170,000 92,000 Less: Accumulated depreciation 69,900 86,000 48,200 33,000 84,000 43,800 186,000 194,000 132,400 Investments Shares in Machinery at cost Shares in Components at cost Current assets Stocks Debtors Cash at bank 135,000 96,000 108,500 75,500 68,400 196,700 124,800 83,500 25,200 25,400 330,400 200,300 177,300 651,400 490,300 309,700