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The following is the trial balance of GPS Ltd. (a trading company) as on 31 December 2020: Dr ($) Cr ($) Ordinary shares $1 50,000
The following is the trial balance of GPS Ltd. (a trading company) as on 31 December 2020: Dr ($) Cr ($) Ordinary shares $1 50,000 10% preference shares $1 10,000 8% debentures 15,000 General reserve 6,000 Revaluation reserve 5,000 Share premium 5,000 Profit and loss account 01.01.2020 1,000 Plant and machinery (at cost) 100,000 Accumulated depreciation: Plant and machinery (as at 01.01.2020) 10,000 Stock 01.01.2020 7.100 Trade debtors / creditors 7,500 3.750 Provision for bad and doubtful debts 200 Bank 6,400 Purchases / Sales 93,000 135,350 Wages and salaries 18,250 Preference dividends 500 Debenture interest 600 General expenses 7.950 241,300 241.300 The following additional information is available: (a) Stock as at 31.12.2020 was valued at $11,750. (b) Plant and machinery is to be depreciated at the rate of 5% per annum straight line on cost. (c) The provision for bad and doubtful debts is to be at 5 % of debtors. (d) $600 of debenture interest and $750 of general expenses are to be accrued. (e) $475 of general expenses have been paid in advance. (1) The company pays tax on profits at a rate of 20 per cent. (9) An ordinary dividend of 10% has been proposed and $500 of preference share dividends are to accrued. (h) The directors have decided to increase the general reserve by a further $1,500. Required: Prepare (i) the Profit and Loss Account of GPS Ltd. for the year ended 31 December 2020 and (ii) the Balance Sheet as at 31 December 2020 based on the net worth format; both statements to be prepared in vertical format and for internal use
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