Select Ltd is registered with an authorised capital of 300,000 ordinary shares of £1. The following trial balance was extracted from the books of the company on 31 March 20X1, after the preparation of the trading account:

Required:

Prepare the profit and loss account of the company for the year ending 31 March 20X1, and balance sheet as at that date, after taking into account the following adjustments:

(i) The provision for doubtful debtors is to be adjusted to £700.

(ii) Depreciation is to be provided in respect of furniture and fittings at 10% per annum on cost.

(iii) £25,000 is to be transferred from profit and loss to general reserve.

(iv) Provide for a proposed dividend on share capital at 10%. Present the balance sheet in a form which shows the shareholders’ equity and the working capital.

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Ordinary share capital, fully paid Land and buildings at cost Sundry debtors Furniture and fittings at cost VAT Sundry Creditors Stock at 31 March 20X0 Bank Trading account: gross profit Office salaries and expenses Accumulated provision for depreciation on furniture and fittings Share premium account Advertising and selling expenses Bad debts Provision for doubtful debts Profit and loss account Directors' fees Dr £ 170,000 38,300 80,000 3,800 42,000 12,000 25,000 5,000 250 11,300 387,650 Cr £ 200,000 25,000 98,050 32,000 20,000 600 12,000 387,650