The Wind Jammers plc has provided the following data as at December 31, 2017

DETAILS	DR	CR
Management Fees	50,000
Wages and Salaries	124,000
Insurance	18,000
Premises	600,000
Motor Vehicle	650,000
Provision for Depn on Motor Vehicle		70,000
Creditors		54,000
Interim Ordinary Shares Dividend	5,000
Cost of Sales	810,000
Closing Stock	230,000
6 % Debenture		200,000
Debenture Interest	7,000
General Reserves		65,000
Retained Earnings	20,000
Goodwill	200,000
Ordinary Share Capital @ $1		600,000
5 % Preference Share Capital @ 0.5		300,000
Sales Turnover		1,440,000
Debtors	55,000
Bank		40,000
	2,769,000	2,769,000

End Notes

a. Insurance is prepaid by 3,000. Wages and salaries is owing by 6,000

b. The goodwill should be written down by 30 %

c. Provide for depreciation on motor vehicle at 10 % on the straight line

d. The following items of expense should be apportioned

ITEM OF EXPENSE	Admin	Sell & Dist.
Insurance	70%	30%
Wages & Salaries	60%	40%
Management Fees	50%	50%
Depreciation Charges	50%	50%

e. Transfer $45,.000 from profits to the general reserves

f. Corporation tax is estimated at $35,000

g. Prior to the end of the year the directors approved the payment of final ordinary shares

dividends of 0.10 per share as well as the preference shares dividends

Required

1. Prepare (a) The Statement of Profit and Loss ( 16 marks )

(b) The Statement of Change in Owners Equity( 10 marks )

NOTE : The Statement of Financial Position is NOT Required

2. Briefly explain two factors that may influence a companys decision

to pay dividends ( 4 marks )