Show your workings. “The following balances have been extracted from the books of Porter Ltd as at 31 December 2020. DR £ CR £ £1 ordinary shares 360,000 6% preference shares 360,000 5% debentures 288,000 Share premium account 198,000 Debenture interest paid 7,200 Interim dividend paid on preference shares 10,800 Bad debts written off 12,168 Provision for doubtful debts 14,688 Cash in hand 11,376 Debtors & Creditors 113,400 46,800 Bank balance 227,520 Land at cost 324,000 Buildings at cost 684,000 Fixtures and fittings at cost 396,000 Accumulated depreciation: Buildings 108,000 Accumulated depreciation: Fixtures 180,000 Retained profits 67,752 Purchases 789,408 Sales 1,440,000 Stock 256,464 Wages and salaries 105,819 General expenses 125,085 3,063,240 3,063,240 “Additional information” “Porter Ltd carries 5 separate items of inventory. Inventory at 31 December 2020 has been counted and valued as follows: Product Valued at cost Valued at Net Realisable value £ £ A 75,918 90,000 B 77,109 60,000 C 48,921 60,000 D 63,063 60,000 E 34,989 45,000 Total 300,000 315,000 “Included in general expenses is an invoice for business rates amounting to £5,400 covering the year to 30 April 2021, which has been paid in full.” “Wages and salaries for December 2020 amounting to £9,735 will be paid at the end of January 2021 and have not yet been accounted for.” “Depreciation is to be provided as follows:” “Buildings: 12% on a straight line basis.” “Fixtures and fittings: 22% on reducing balance basis.” “The directors wish to make the following adjustments to debtors:” “Write off a further debt of £2,190.” “Make a specific provision of 12% against a debtor who owes £1,000.” “Make a 10% general provision on remaining debtors.” “The corporation tax for the year has been estimated at £45,000 which is payable on 1st October 2021.” “The directors propose to pay the preference dividend and a 4% ordinary dividend.” “Required” “Prepare Porter Ltd’s Profit & Loss account for the year ended 31 December 2020 and a Balance Sheet as at that date.”

Show your workings. “The following balances have been extracted from the books of Porter Ltd as at 31 December 2020. DR £ CR £ £1 ordinary shares 360,000 6% preference shares 360,000 5% debentures 288,000 Share premium account 198,000 Debenture interest paid 7,200 Interim dividend paid on preference shares 10,800 Bad debts written off 12,168 Provision for doubtful debts 14,688 Cash in hand 11,376 Debtors & Creditors 113,400 46,800 Bank balance 227,520 Land at cost 324,000 Buildings at cost 684,000 Fixtures and fittings at cost 396,000 Accumulated depreciation: Buildings 108,000 Accumulated depreciation: Fixtures 180,000 Retained profits 67,752 Purchases 789,408 Sales 1,440,000 Stock 256,464 Wages and salaries 105,819 General expenses 125,085 3,063,240 3,063,240 “Additional information” “Porter Ltd carries 5 separate items of inventory. Inventory at 31 December 2020 has been counted and valued as follows: Product Valued at cost Valued at Net Realisable value £ £ A 75,918 90,000 B 77,109 60,000 C 48,921 60,000 D 63,063 60,000 E 34,989 45,000 Total 300,000 315,000 “Included in general expenses is an invoice for business rates amounting to £5,400 covering the year to 30 April 2021, which has been paid in full.” “Wages and salaries for December 2020 amounting to £9,735 will be paid at the end of January 2021 and have not yet been accounted for.” “Depreciation is to be provided as follows:” “Buildings: 12% on a straight line basis.” “Fixtures and fittings: 22% on reducing balance basis.” “The directors wish to make the following adjustments to debtors:” “Write off a further debt of £2,190.” “Make a specific provision of 12% against a debtor who owes £1,000.” “Make a 10% general provision on remaining debtors.” “The corporation tax for the year has been estimated at £45,000 which is payable on 1st October 2021.” “The directors propose to pay the preference dividend and a 4% ordinary dividend.” “Required” “Prepare Porter Ltd’s Profit & Loss account for the year ended 31 December 2020 and a Balance Sheet as at that date.”

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Show your workings.

“The following balances have been extracted from the books of Porter Ltd as at 31 December 2020.

	DR £	CR £
£1 ordinary shares		360,000
6% preference shares		360,000
5% debentures		288,000
Share premium account		198,000
Debenture interest paid	7,200
Interim dividend paid on preference shares	10,800
Bad debts written off	12,168
Provision for doubtful debts		14,688
Cash in hand	11,376
Debtors & Creditors	113,400	46,800
Bank balance	227,520
Land at cost	324,000
Buildings at cost	684,000
Fixtures and fittings at cost	396,000
Accumulated depreciation: Buildings		108,000
Accumulated depreciation: Fixtures		180,000
Retained profits		67,752
Purchases	789,408
Sales		1,440,000
Stock	256,464
Wages and salaries	105,819
General expenses	125,085
	3,063,240	3,063,240

“Additional information”

“Porter Ltd carries 5 separate items of inventory. Inventory at 31 December 2020 has been counted and valued as follows:

Product	Valued at cost	Valued at Net Realisable value
£	£
A	75,918	90,000
B	77,109	60,000
C	48,921	60,000
D	63,063	60,000
E	34,989	45,000
Total	300,000	315,000

“Included in general expenses is an invoice for business rates amounting to £5,400 covering the year to 30 April 2021, which has been paid in full.”
“Wages and salaries for December 2020 amounting to £9,735 will be paid at the end of January 2021 and have not yet been accounted for.”
“Depreciation is to be provided as follows:”
1. “Buildings: 12% on a straight line basis.”
2. “Fixtures and fittings: 22% on reducing balance basis.”
“The directors wish to make the following adjustments to debtors:”
1. “Write off a further debt of £2,190.”
2. “Make a specific provision of 12% against a debtor who owes £1,000.”
3. “Make a 10% general provision on remaining debtors.”
“The corporation tax for the year has been estimated at £45,000 which is payable on 1st October 2021.”
“The directors propose to pay the preference dividend and a 4% ordinary dividend.”

“Required”

“Prepare Porter Ltd’s Profit & Loss account for the year ended 31 December 2020 and a Balance Sheet as at that date.”

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