You are the assistant accountant with BEST EVER Ltd.Your boss has asked you to prepare the draft Income Statement,Statement of Financial Position and Statement of
Changes in Equity for the year ended 31December 2014,for internal use,based on
the following Trial Balance (extracted from the computerized record keeping system)
and the additional information shown below.
The company’s authorized share capital is as follows:
l 2,000,000 Ordinary Shares of £1 each
l 1,500,000 7% Preference Shares of £1 each
Profit & Loss Account (1 January 2014) 182
Wages & Salaries 720
Administrative Expenses 540
Auditor’s fees 26
Heating & Lighting 43
Rent & Rates 137
Provision for Depreciation (1 January 2014)
Fixtures & Fittings 146
Motor Vehicles 152
Ordinary Share Capital 2,000
7% Preference Share Capital 1,500
General Reserve 300
<pclass=”msonormal” style=”margin-bottom: 0.0001pt; line-height: 11.1pt;”>Additional Information
1 Clerical and management staff we reawarded a bonus amounting to£4,000 in
mid-December2014.This bonus has not been paid yet andit should be
2 Rent & Rates include £8,000 which relates to the coming year.
3 Closing inventory at 31 December 2014 was valued at £280,000.
4 It is estimated that corporation tax of £8,000 will bepayable on the profits for the year.
5 Preference Dividend should for the year should be provided in full.
6 An Ordinary Dividend of 15p per share is proposed.
7 Thedirectorsproposetoprovideforthe depreciation of non-current assets for the
yea as follows:
Fixtures and Fittings @ the rate of 20% per annum using the straight-line method
MotorVehicles @ the rate of 20% per annum using the straight-line method
8 Transfer £8,000 to the General Reserve.
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