265,0
Showing your workings, please can you solve this question.
Top Autos Ltd are a car sales business and the following
|
Trial Balance |
Dr (£) |
Cr (£) |
|
£1 Ordinary shares |
|
265,000 |
|
5% |
|
400,000 |
|
10% Debentures |
|
250,000 |
|
Share premium account |
|
120,000 |
|
Debenture interest paid |
12,500 |
|
|
|
18,000 |
|
|
Provision for doubtful debts (1st Jan 2018) |
|
11,250 |
|
Bank |
36,850 |
|
|
Cash in hand |
25,800 |
|
|
Debtors |
225,000 |
|
|
Creditors |
|
105,000 |
|
Land at cost |
680,000 |
|
|
Buildings at cost |
1,850,000 |
|
|
Fixtures and fittings (F&F) at cost |
265,000 |
|
|
|
|
462,500 |
|
Accumulated depreciation: F&F (1st Jan 2018) |
|
102,257 |
|
Retained profits (1st Jan 2018) |
|
532,393 |
|
Purchases |
1,215,800 |
|
|
Sales |
|
2,845,000 |
|
Stock / Inventory (1st Jan 2018) |
435,800 |
|
|
General expenses |
328,650 |
|
|
Totals |
5,093,400 |
5,093,400 |
- Given the following additional information;
- Stock at 31 December 2018 has been valued at £425,800.
- Insurance (in general expenses) includes an invoice for the year to 30th June 2019 amounting to £1,250.
- An invoice for the 3 months ended 31 December 2018 was received on 25 January 2019 and was for the amount of £6000.
- Depreciation is to be provided as follows:
- Buildings: 5% on straight line basis.
- Fixtures and fittings: 15% on reducing balance basis.
- The directors wish to make the following adjustments to debtors:
- Write off a further debt of £7,250.
- Make a specific provision of 25% against a debtor who owes £32,000.
- Make a 4% general provision on remaining debtors.
- The preference shares were issued on 1 October 2018.
- The corporation tax for the year has been estimated at £125,000, which is payable on 1 October 2019.
- The directors propose to pay the preference dividend and a 10% ordinary dividend.
REQUIRED:
1. Prepare Top Autos Ltd.’s Profit & Loss account for the year ended 31 December 2018 and a
2. Explain how a share premium may arise and, using an example, show the accounting entries required for such a share issue.
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