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

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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