The authorised capital was 1,000,000 ordinary shares of 50p each and £100,000 preference shares (6%) of £1 each Debit £ Credit £ Ordinary share capital(1,000,000 of 50p each) 500,000 Preference share capital (100,000 fully paid shares of £1 each) 100,000 Share premium 100,000 Premises at cost 400,000 Motor Vehicles at cost 80,000 Accumulated depreciation-Motor vehicle - 12,000 Accumulated depreciation on Premises 8,000 Investment at Cost 150,000 Investment Income 5,000 Retained Profit 50,000 Carriage Inwards 3,500 Wages and Salaries 96,500 Maintenance and repairs 30,000 Bad debts 5,000 Allowance for doubtful debts 5,000 Sales 800,000 Purchases 500,000 Trade receivables 150,000 Trade Payables 120,000 Administration expenses 43,000 Advertising 20,000 Inventory at 1st January 2019 120,000 Preference dividend (paid) 3,000 Ordinary dividend (Paid) 7,000 Return outwards 8,000 Sales returns 15,000 Director's remuneration 50,000 Bank Balance 35,000 1,708,000 1,708,000 Additional Information: Inventory on 31 December 2019 was valued at £150,000. £2,000 of the administration charge expenses have been prepaid at the year- end Depreciation is to be charged as follows: Depreciation on premises 2% on cost Motor Vehicle 25% per annum on a reducing balance basis Following a review of the accounts receivables it was decided to adjust the allowance for doubtful debts to 5% of the receivables as at balance date. Wages & salaries of £3,000 owed as at year end The tax provision for £8,000 to be made A transfer of £10,000 to made to the general reserve The company made a bonus issue of one share for every 10 held , using the share premium account A dividend of £10,000 on ordinary shares was proposed Required Prepare an Income Statement for Internal use and a Statement of changes in equity for the year ended 31 December 2019 Prepare a Statement of Financial Position for Grooms Limited as at 31 December 2019.

The authorised capital was 1,000,000 ordinary shares of 50p each and £100,000 preference shares (6%) of £1 each Debit £ Credit £ Ordinary share capital(1,000,000 of 50p each) 500,000 Preference share capital (100,000 fully paid shares of £1 each) 100,000 Share premium 100,000 Premises at cost 400,000 Motor Vehicles at cost 80,000 Accumulated depreciation-Motor vehicle - 12,000 Accumulated depreciation on Premises 8,000 Investment at Cost 150,000 Investment Income 5,000 Retained Profit 50,000 Carriage Inwards 3,500 Wages and Salaries 96,500 Maintenance and repairs 30,000 Bad debts 5,000 Allowance for doubtful debts 5,000 Sales 800,000 Purchases 500,000 Trade receivables 150,000 Trade Payables 120,000 Administration expenses 43,000 Advertising 20,000 Inventory at 1st January 2019 120,000 Preference dividend (paid) 3,000 Ordinary dividend (Paid) 7,000 Return outwards 8,000 Sales returns 15,000 Director's remuneration 50,000 Bank Balance 35,000 1,708,000 1,708,000 Additional Information: Inventory on 31 December 2019 was valued at £150,000. £2,000 of the administration charge expenses have been prepaid at the year- end Depreciation is to be charged as follows: Depreciation on premises 2% on cost Motor Vehicle 25% per annum on a reducing balance basis Following a review of the accounts receivables it was decided to adjust the allowance for doubtful debts to 5% of the receivables as at balance date. Wages & salaries of £3,000 owed as at year end The tax provision for £8,000 to be made A transfer of £10,000 to made to the general reserve The company made a bonus issue of one share for every 10 held , using the share premium account A dividend of £10,000 on ordinary shares was proposed Required Prepare an Income Statement for Internal use and a Statement of changes in equity for the year ended 31 December 2019 Prepare a Statement of Financial Position for Grooms Limited as at 31 December 2019.

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

019. The authorised capital was 1,000,000 ordinary shares of 50p each and £100,000 preference shares (6%) of £1 each


	Debit £	Credit £
Ordinary share capital(1,000,000 of 50p each)		500,000
Preference share capital (100,000 fully paid shares of £1 each)		100,000
Share premium		100,000
Premises at cost	400,000
Motor Vehicles at cost	80,000
Accumulated depreciation-Motor vehicle -		12,000
Accumulated depreciation on Premises		8,000
Investment at Cost	150,000
Investment Income		5,000
Retained Profit		50,000
Carriage Inwards	3,500
Wages and Salaries	96,500
Maintenance and repairs	30,000
Bad debts	5,000
Allowance for doubtful debts		5,000
Sales		800,000
Purchases	500,000
Trade receivables	150,000
Trade Payables		120,000
Administration expenses	43,000
Advertising	20,000
Inventory at 1st January 2019	120,000
Preference dividend (paid)	3,000
Ordinary dividend (Paid)	7,000
Return outwards		8,000
Sales returns	15,000
Director's remuneration	50,000
Bank Balance	35,000
	1,708,000	1,708,000

Additional Information:

Inventory on 31 December 2019 was valued at £150,000.

£2,000 of the administration charge expenses have been prepaid at the year- end

Depreciation is to be charged as follows:

Depreciation on premises 2% on cost

Motor Vehicle 25% per annum on a reducing balance basis

Following a review of the accounts receivables it was decided to adjust the allowance for doubtful debts to 5% of the receivables as at balance date.

Wages & salaries of £3,000 owed as at year end

The tax provision for £8,000 to be made
A transfer of £10,000 to made to the general reserve

The company made a bonus issue of one share for every 10 held , using the share premium account
A dividend of £10,000 on ordinary shares was proposed

Required

Prepare an Income Statement for Internal use and a Statement of changes in equity for the year ended 31 December 2019
Prepare a Statement of Financial Position for Grooms Limited as at 31 December 2019.

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.

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