Camden Lock Ltd has just finished its second year of trading to 31 December 20X7. Balances from Question 7.1 need to be brought forward into this question. Tax rates are the same as for 20X6.

The following information is available:

(i) The proposed final dividend for 20X6 (see Review Question 7.1) was paid on 31 January 20X7.

(ii) Shares in Strand Ltd were bought on 1 January 20X7. A dividend of £4,200 was received on 30 September 20X7.

(iii) Debentures in Strand Ltd were bought on 1 July 20X7. Debenture interest of £8,400 (net) was received on 31 December 20X7.

(iv) Debenture interest of £14,000 (net) was paid by Camden Lock Ltd on 31 December 20X7.

(v) Income tax owing to the Inland Revenue for 20X7 was not paid until 20X8. The 20X6 income tax was paid on 30 January 20X7.

(vi) An interim dividend of 5 per cent on 800,000 £1 ordinary shares was paid on 10 July 20X7.

(vii) A final dividend of 9 per cent was proposed for the year.

(viii) Depreciation of £90,000 was charged. Capital allowances were £120,000.

(ix) Net trading profit (before taking into account (ii), (iii), and (iv)) was £540,000.

(x) The corporation tax due for 20X6 was paid on 1 October 20X7. Corporation tax for the year to 31 December 20X7 is expected to be £160,000.

You are required to:

(a) Draw up the double entry accounts recording the above (except bank).

(b) Show the relevant extracts from the profit and loss account for the year and balance sheet at the year end.