70.2K
Verified Solution
Link Copied!
Q1.
The following balances have been extracted from the books of Caswell Ltd as at 31 December 2009.
| |
|
|
| 1 ordinary shares | | 600,000 |
| 6% preference shares | | 600,000 |
| 5% debentures | | 480,000 |
| Share premium account | | 330,000 |
| Debenture interest paid | 12,000 | |
| Bad debts written off | 20,280 | |
| Provision for doubtful debts | | 24,480 |
| Cash in hand | 18,960 | |
| Debtors & Creditors | 207,000 | 78,000 |
| Bank balance | 379,200 | |
| Land at cost | 540,000 | |
| Buildings at cost | 1,140,000 | |
| Fixtures and fittings at cost | 660,000 | |
| Accumulated depreciation: Buildings Fixtures | | 180,000 300,000 |
| Retained Earnings | | 112,920 |
| Purchases | 1,315,680 | |
| Sales | | 2,400,000 |
| Stock | 427.440 | |
| General expenses | 384,840 | |
| | 5,105,400 | 5,105,400 |
You have been given the following additional information:
- Stock at 31 December 2009 has been valued at 466,380
- General expenses includes 12,000 paid in respect of the insurance for the year to 30th June 2010.
- An invoice of 1,150 for electricity for the quarter period to 31st December needs to be included in general expenses.
- Depreciation to be provided as follows: 10% on cost on buildings
20% on written down value of fixtures and fittings
- The directors wish to write off a further debt of 8,550 and retain a 10% general provision on the remaining debtors
- The preference shares were issued on 1 October 2009.
- The corporation tax for the year has been estimated at 150,000, which is payable on 1st October 2010
- The share premium account arose on the issue of ordinary shares
- The directors propose to pay the preference dividend and a 6% ordinary dividend
REQUIRED:
a) Prepare a Profit & Loss Account for the year ended 31 December 2009 and a Balance Sheet as at that date.
b) Explain briefly the objective of depreciation and how the two methods of depreciation used by Caswell Ltd. differ.
Answer & Explanation
Solved by verified expert
