The following balances have been extracted from the books of Printers Ltd as at 31 December 2019.
Question:
The following balances have been extracted from the books of Printers Ltd as at 31 December 2019.
DR £ | CR £ | |
£1 ordinary shares | 300,000 | |
8% preference shares | 300,000 | |
10% debentures | 240,000 | |
Share premium account | 165,000 | |
Debenture interest paid | 12,000 | |
Bad debts written off | 10,140 | |
Provision for doubtful debts (1st Jan 2019) | 12,240 | |
Cash in hand | 9,480 | |
Debtors & Creditors | 103,500 | 39,000 |
Bank balance | 183,600 | |
Land at cost | 270,000 | |
Buildings at cost | 570,000 | |
Fixtures and fittings at cost | 330,000 | |
Accumulated depreciation: Buildings (1st Jan 2019) | 90,000 | |
Accumulated depreciation: Fixtures (1st Jan 2019) | 150,000 | |
Retained profits (1st Jan 2019) | 56,460 | |
Purchases | 657,840 | |
Sales | 1,200,000 | |
Stock (1st Jan 2019) | 213,720 | |
General expenses | 192,420 | |
2,552,700 | 2,552,700 |
Additional information
- Stock at 31st December 2019 cost £180,120. However, stock includes items that originally cost £8,500 and are obsolete and will need to be scrapped.
- Insurance (in general expenses) includes an invoice for the year to 30th June 2020 amounting to £16,000.
- An invoice of £1,050 for utilities for the quarter period to 31st December needs to be included in general expenses.
- Depreciation is to be provided as follows:
- Buildings: 10% on a straight line basis.
- Fixtures and fittings: 20% on reducing balance basis.
- The directors wish to make the following adjustments to debtors:
- Write off a further debt of £1,550.
- Make a specific provision of 25% against a debtor who owes £2,500.
- Make a 10% general provision on remaining debtors.
- The preference shares were issued on 1st July 2019.
- The corporation tax for the year has been estimated at £55,000 which is payable on 1st October 2020.
- The directors propose to pay the preference dividend and a 10% ordinary dividend.”
Required
“Prepare Printers Ltd.’s Profit & Loss account for the year ended 31st December 2019 and a Balance Sheet as at that date.”
Expert Answer:
D25 fx D E F G H I J K L depreciation building 570000 57000 10 straight line working debtors 103500 ... View the full answer
