Mallard Co. was formed on 1 January 20X1 with 10 000 issued ‚¬1 ordinary shares. The same day they obtained a 12% loan of ‚¬8 000 and bought fixed assets for ‚¬9 000. During 20X1 their purchases and sales of widgets were as follows:

(a) Purchases and sales were all paid for in cash.
(b) The loan interest was paid early in the following year (20X2).
(c) The buying price of widgets changed on 1 March, 1 June, 1 September, and on 1 December (when it was ‚¬100).
(d) The fixed assets are to be depreciated at 10% p.a. At 31 December 20X1 their buying price was ‚¬12 600.
(e) General expenses during the year were ‚¬13 200.
(i) Prepare a balance sheet as at 31 December, 20X1 together with a trading profit and
loss account for the year to 31 December 20X1, on replacement cost lines.
(ii) What are holding gains? In what circumstances are they distributable?

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Sales Purchases 3 January 1 February Apri 1 May 1 July 1 August 1 October 1 November 100 at 8c 110 at e75 100 at 85 120 at 90 8 000 8 250 8 500 10 800 4 60 at 120 90 at 120 130 at 120 110 at 130 7 200 10 800 15 600 14 300