The following balances remained in the ledger of OK Ltd after preparation of the profit and loss account for the year ended 31 March 20X6

The directors propose:

(i) A transfer to general reserve of £10,000;

(ii) Payment of the preference dividend and a 12% dividend on the ordinary shares.

Required:

(a) Prepare a profit and loss appropriation account for the year ended 31 March 20X6.

(b) Prepare a balance sheet as at 31 March 20X6, showing clearly the ordinary shareholders’ equity, the total shareholders’ funds and the working capital.

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Stock Debtors Ordinary share capital 8% preference share capital Creditors Balance at bank General reserve Profit and loss account balance 20X5 Net profit for the year to 31 March 20X6 Fixed assets at cost, less depreciation £000s 52 24 100 50 37 14 30 11 29 167