Gamma Ltd has a trading profit for the year ended 31 December 2023, before dealing with the following items, of $55,000. You are to complete the profit and loss account and appropriation account.
1.The standard rate of income tax is 32%.
2.Gamma Ltd had $35,000 of 9% debentures. It sent cheques for debenture interest for the year less income tax, on 31 December 2023.
3.Gamma Ltd had bought $10,000 of 11% 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.Gamma Ltd had bought 18,000 ordinary shares of $1 each in Delta Ltd. Delta Ltd paid a dividend to Gamma Ltd of 17% on 30 November 2023. Delta Ltd is a 'related company'.
6.Gamma Ltd had a liability for corporation tax, based on profits for 2023, of $28,000.
7.Gamma Ltd proposed a dividend of 26% on its 70,000 ordinary shares of $1 each, out of the profits for 2023.
8.Transfer $5,500 to general reserve.
9.Unappropriated profits brought forward from last year amounted to $9,800.
Requirement: Complete the profit and loss account and appropriation account for Gamma Ltd and prepare the statement of retained earnings.