Accounting Test Question No Ltd 1 On Limited Companies-Profit & Loss Appropriation Account

October 11th, 2008 Comments off
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Below question is testing the reader on the preparation of the Profit & Loss Appropriation Account.

{Hint: So from the masses of data, just pick up the net profit for the year ended and worked on the dividends whether paid or payable and for the different types of dividend re: preferential & ordinary share.]

Question:

Jim Ltd had authorized capital of $400,000 divided into 100,000 10% Preference Shares of $1 each and 300,000 Ordinary Shares of $1 each. After preparation of the final accounts, the following balances were extracted from the books of the company on 31 December Year 8

$

$

Ordinary Share Capital, fully paid

200,000

10% Preference share capital, fully paid

60,000

Fittings at cost

66,000

Premises

200,000

Stock

39,500

Provision for depreciation of fittings

9,200

Debtors And Creditors

46,500

26,700

Provision for bad debts

2,800

Interim Ordinary Dividend paid

10,000

Bank overdraft

4,500

Profit & Loss Account balance, 1 January Year 8

17,300

Net Profit for the year ended 31 December Year 8

41,500

Note: The Directors recommended that a final dividend of $0.08 on the Ordinary Share Capital be paid.

Required:

Prepare a Profit & Loss Appropriation Account for the year ended 31 December Year 8.

REFER ANSWER

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Financial Accounting

 
 

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