12.5 The profit and loss accounts of H Ltd and S Ltd for the year ended 31 December 20X5 are shown below together with their balance sheets at that date:

Profit and loss accounts H Ltd S Ltd

£000

£000 Sales 200 180 Expenses 110 100 90 80 Dividends from S Ltd 30 _

Profit before tax 120 80 Taxation 35 20 Profit after tax 85 60 Dividends paid 35 40 50 20 Retained profits brought forward 30 7

Retained profits carried forward 80 27 Balance sheets

£000

£000 Assets minus liabilities 140 52 Investment in S Ltd (18,750 shares)

40

—

180 52 Share capital, £l per share 100 25 Retained earnings 80 27 180 52 There was no inter-company trading during the year.

On 31 December 20X3, the date on which H purchased its holding of shares in S, the retained earnings of S Ltd amounted to £2,000.

Required:

Prepare a consolidated profit and loss account for the year ended 31 December 20X5 and a consolidated balance sheet as at that date.