Question No : Pump Ltd., a newly forming company, estimates it will need capital of 1m so that it can remain in business. It estimates its profits per annum before interest payments and dividends as 100,000 in the first year with an estimated 2% increase year on year. It proposes to issue 500,000 50p ordinary shares at a premium of 40p, 220,000 4% 2 preference shares and to raise the remaining capital it needs from an issue of 3% debentures. Show the capital section of the balance sheet and the non-current liabilities assuming estimated profit is realized, the statement of changes in equity and the income statement as far as the information provided permits for the first two years of trading. The interim and final dividends for Year 1 are expected to be 2p and 3p and for Year 2 4p and 5p. Assume the final dividend is paid before the year end.?

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