1. You will be given with Trial Balance and additional information.

Trial balance as on 31 December 20X5

Dr Cr

10% preference share capital 200,000

Ordinary share capital 700,000

10% debentures (repayable 20X9) 300,000

Goodwill at cost 255,000

Buildings at cost 1,050,000

Equipment at cost 120,000

Motor vehicles at cost 172,000

Provision for depreciation: buildings 1.1.20X5 100,000

Provision for depreciation: equipment 1.1.20X5 24,000

Provision for depreciation: motor vehicles 1.1.20X5 51,600

Stock 1.1.20X5 84,912

Sales 1,017,900

Purchases 439,100

Carriage inwards 6,200

Salaries and wages (administrative staff)110,400

Salaries and wages (distribution staff)82,000

Directors remuneration 123,000

Motor expenses (see note ix)3,120

Business rates and insurances 8,690

General administrative expenses 2,400

General distribution expenses3,200

Debenture interest 15,000

Debtors 186,100

Provision for bad and doubtful debts4,100

Creditors 113,700

Bank 8,390

General reserve 50,000

Share premium account 100,000

Interim ordinary dividend paid 35,000

Profit and loss account 31.12.20X4 43,212

2,704,512 2,704,512

The following adjustments are needed:

(i ) Stock at 31.12.20X5 was 91,413.

(ii ) Depreciate buildings 1 percent and motor vehicles 10 percent straight-line; equipment 20 percent reducing balance.

(iii ) Accrue debenture interest 15,000.

(iv) Provide for preference dividend 20,000 and final ordinary dividend of 5 percent.

(v) Transfer 10,000 to general reserve.

(vi ) Write off goodwill 30,000 in P&L appropriations part.

(vii ) Authorised share capital is 200,000 in preference shares and 1 million in ordinary shares.

(viii ) Provide for corporation tax 20,000.

(ix) Equipment, motor expenses and depreciation on motors to be apportioned: Distribution , Administrative .

(x) Buildings depreciation to be apportioned: Distribution 3/5th ; Administrative 2/5th

(xi) Adjust provision to 3 percent of total outstanding debtors.

Required:

a) Prepare the profit and loss account for XXX Ltd for the year ended 31 December 20X5 for internal use.

b) Prepare the balance sheet for XXX Ltd for the year ended 31 December 20X5 for internal use.