Answer the following question on company accounts

The following balances were obtained from the books of the New Horizon

plc as of December 31, 2017:

	$	$
Goodwill	180 000
Premises	400 000
10% Debenture(2016-2021)		160 000
Retained Profit	75 500
Accounts Receivable	170 000
Accounts payable		55 000
General Reserves		80 000
Management expenses	65 000
Ordinary Share capital @ $0.50 per share		300 000
10% preference shares @ $1.00		150 000
Motor vehicle	160 000
Provision for depreciation on motor vehicle		20 000
10% secure loan		100 000
Sales		1 650 000
Cost of sales	1 150 000
Furniture & Fittings	80 000
Provision for depreciation on fixtures& Fittings		20 000
Inventory at December 31, 2017	145 100
Loan interest	4 000
Insurance	12 000
Directors fee	40 000
Debenture interest	14 000
Interim dividend	5 000
Cash and bank		90 600
Wages and salaries	125 000	___
	2 625 600	2 625 600

Additional Information:

a. Provide for depreciation as follows: fixtures and fittings 10% on straight line

motor vehicles 10% reducing balance. Depreciation charges should be apportioned equally between admin and selling and distribution

b. Wages and salaries owing by 15,000; insurance prepaid by 3,000

c. In addition to the preference share dividends, account for final ordinary share dividends is proposed at 0.01c per share

d. The following appropriation of the expenses must be made

Admin Selling & Dist.

Wages & salaries 75% 25%

Insurance 1/3 2/3

Management fees 60% 40%

Directors fees 100% --

e. Write off 25% of the goodwill

f. Corporation tax is estimated at 30,000

g. Transfer 15,000 to general reserves

Required: Prepare the income statement, statement of change in equity and the statement of financial position for publication at year end. Show notes where appropriate.

[ Total 40 marks]