Epsilon Ltd has a trading profit for the year ended 31 December 2023, before dealing with the following items, of $40,000. You are to complete the profit and loss account and appropriation account.
1.The standard rate of income tax is 29%.
2.Epsilon Ltd had $25,000 of 7% debentures. It sent cheques for debenture interest for the year less income tax, on 31 December 2023.
3.Epsilon Ltd had bought $12,000 of 9% debentures in another company. It received a year's interest, less income tax, on 30 December 2023.
4.No cheque has been paid to the Inland Revenue for income tax.
5.Epsilon Ltd had bought 10,000 ordinary shares of $1 each in Zeta Ltd. Zeta Ltd paid a dividend to Epsilon Ltd of 18% on 30 November 2023. Zeta Ltd is a 'related company'.
6.Epsilon Ltd had a liability for corporation tax, based on profits for 2023, of $20,000.
7.Epsilon Ltd proposed a dividend of 22% on its 50,000 ordinary shares of $1 each, out of the profits for 2023.
8.Transfer $3,000 to general reserve.
9.Unappropriated profits brought forward from last year amounted to $7,500.
Requirement: Complete the profit and loss account and appropriation account for Epsilon Ltd and prepare a summary of dividends paid.