22.6 A Ltd and B Ltd are two companies both in the same line of business. The financial state ments of both companies for the year ended 31 December 20X1 are summarised below.

Profit and loss accounts A Ltd B Ltd

£000

£000

£000

£000 Sales 3,600 4,350 Cost of goods sold 2,700 3,480 Gross profit 900 870 Expenses:

Administrative expenses 450 450 Selling and distribution 150 190 Debenture interest

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30 600 670 Net profit before tax 300 200 Corporation tax 120 90 Net profit after tax 180 110 Dividend 45 60 Retained profit 135 50 Balance sheets A Ltd B Ltd £000 £000 £000 Fixed assets At cost 1,500 1,200 Accumulated depreciation 300 1,200 240 Current assets Stock 825 485 Debtors 900 750 Bank 75 1,800 5 1,240 Less: Current liabilities Creditors 765 1,050 Bank overdraft —
80 £000 960