EpsilonTech 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.EpsilonTech Ltd had $25,000 of 6% debentures. It sent cheques for debenture interest for the year less income tax, on 31 December 2023.
3.EpsilonTech Ltd had bought $10,000 of 12% 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.EpsilonTech Ltd had bought 12,000 ordinary shares of $1 each in ZetaTech Ltd. ZetaTech Ltd paid a dividend to EpsilonTech Ltd of 18% on 30 November 2023. ZetaTech Ltd is a 'related company'.
6.EpsilonTech Ltd had a liability for corporation tax, based on profits for 2023, of $18,000.
7.EpsilonTech Ltd proposed a dividend of 20% on its 70,000 ordinary shares of $1 each, out of the profits for 2023.
8.Transfer $4,000 to general reserve.
9.Unappropriated profits brought forward from last year amounted to $8,000.
Requirement: Complete the profit and loss account and appropriation account for EpsilonTech Ltd and prepare a reconciliation of retained earnings.