11.5 The following balances have been extracted from the books of Ekswye Co. Ltd at 31 December 20X2:

Called-up share capital 600,000 Ordinary shares at £1 each 300,000 6% Preference shares at £l each Share premium account Revaluation reserve Profit and loss account 5% Debenture loans Debtors Creditors Bank balance Freehold property at valuation Plant and machinery at cost Stock Cash Provision for doubtful debts Provision for depreciation:

Land and buildings Plant and machinery Directors’ remuneration Other administrative expenses Selling and distribution expenses Debenture interest Sales Cost of goods sold

£ £

600,000 300,000 120,000 100,000 330,000 600,000 400,000 375,000 150,000 1,600,000 1,900,000 300,000 10,000 20,000 400,000 700,000 250,000 185,000 250,000 30,000 4,030,000 2,800,000 _

£7,725,000 £7,725,000 The following information is to be taken into account:
1. The value of the buildings is estimated at £800,000. The balance of the figure for property represents the site. Depreciation at 5 per cent per annum is to be provided on the value of the buildings.
2. Depreciation on plant and machinery is to be provided at 10 per cent per annum on cost.
3. The provision for doubtful debts is to be adjusted to 2.5 per cent of debtors.
4. Corporation tax based on the year’s profit is calculated to be £50,000. Tax will be paid during 20X3.
5. The audit fee for the year is estimated to be £15,000.
6. The directors have decided:

(a) to pay the preference dividend for the year, payment to be made during January 20X3;

(b) to recommend a dividend of 10 pence per share on the ordinary shares.
Prepare the profit and loss account of Ekswye Co. Ltd for the year ended 31 December 20X2 and the balance sheet as at that date.