On 31 May 2016, the following figures were extracted from the general ledger of Leonora Ltd.

Additional information:
On 31 May 2016, the directors of Leonora Ltd resolved to:

a. Provide for estimated tax liability, $65 000

b. Transfer $2100 to general reserve

c. Propose a dividend at the rate of 5 percent on share capital.

Required:
1. Prepare an income statement and a note of retained profits for the year ended 31 May 2016.
2. Prepare a balance sheet as at 31 May 2016.

Transcribed Image Text:

Share capital Retained profits Mortgage Plant Cash Goodwill Accounts receivable Accounts payable Prepayments Accrued expenses Accumulated depreciation Inventory Government bonds General reserve Land Profit before tax DR $ 200 000 6100 15 000 7 400 620 84450 10000 100 000 423 570 CR $ 156000 20000 27 000 5200 470 55 000 17900 142000 423 570