Top Autos Ltd are a car sales business and the following trial balance was taken from their books and covers the year to 31st December 2018 Trial Balance Dr (£) Cr (£) £1 Ordinary shares 265,000 5% Preference shares 400,000 10% Debentures 250,000 Share premium account 120,000 Debenture interest paid 12,500 Bad debts written off 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 Accumulated depreciation: Buildings (1st Jan 2018) 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 Balance Sheet as at that date. 2. Explain how a share premium may arise and, using an example, show the accounting entries required for such a share issue.

Top Autos Ltd are a car sales business and the following trial balance was taken from their books and covers the year to 31st December 2018 Trial Balance Dr (£) Cr (£) £1 Ordinary shares 265,000 5% Preference shares 400,000 10% Debentures 250,000 Share premium account 120,000 Debenture interest paid 12,500 Bad debts written off 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 Accumulated depreciation: Buildings (1st Jan 2018) 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 Balance Sheet as at that date. 2. Explain how a share premium may arise and, using an example, show the accounting entries required for such a share issue.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Top Autos Ltd are a car sales business and the following trial balance was taken from their books and covers the year to 31^st December 2018

Trial Balance	Dr (£)	Cr (£)
£1 Ordinary shares		265,000
5% Preference shares		400,000
10% Debentures		250,000
Share premium account		120,000
Debenture interest paid	12,500
Bad debts written off	18,000
Provision for doubtful debts (1^st 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
Accumulated depreciation: Buildings (1^st Jan 2018)		462,500
Accumulated depreciation: F&F (1^st Jan 2018)		102,257
Retained profits (1^st Jan 2018)		532,393
Purchases	1,215,800
Sales		2,845,000
Stock / Inventory (1^st 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:
1. Buildings: 5% on straight line basis.
2. Fixtures and fittings: 15% on reducing balance basis.
The directors wish to make the following adjustments to debtors:
1. Write off a further debt of £7,250.
2. Make a specific provision of 25% against a debtor who owes £32,000.
3. 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 Balance Sheet as at that date.

2. Explain how a share premium may arise and, using an example, show the accounting entries required for such a share issue.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Expert Solution

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.