After completion of the Trading Account, the following

After completion of the Trading Account, the following balances were extracted from the books of Peter Jordan plc on 30 April 2006.

Authorized and issued share capital

Ordinary shares $1 each fully paid 1 500 000

7% Preference shares of $1 each fully paid 200 000

Premises 2 300 000

Motor vehicles 500 000

Fixtures and fittings 170 000

Provision for depreciation on motor vehicles 375 000

Provision for depreciation on fixtures and fittings 102 000

Gross profit 1 620 000

Stock 204 000

Office expenses 458 000

Selling and distribution expenses 486 000

6% debentures – 2011 (issued in 2001) 100 000

Debenture interest paid 3 000

Retained profit – 1 May 2005 143 600

Debtors 132 000

Creditors 116 000

Bank Overdraft 26 800

Cash 400

Share premium 150 000

Interim dividend paid – ordinary shares 75 000

preference shares 8 000

Provision for doubtful debts 3 000

Additional information at 30 April 2006:

  1. On April 30th 2006, 60,000 preference shares were redeemed from the proceeds of 40,000 ordinary shares issued at a price of $1.50 per share. A bonus issue of 1 in every 15 shares held was then made to existing share-holders.
  1. Office expenses prepaid $8 000
  2. Selling and distribution expenses accrued $23 000
  3. Provision for doubtful debts to be maintained at 2% of debtors
  4. Depreciation to be provided as follows:

Motor vehicles 50% per annum reducing (diminishing) balance

Fixtures and fittings 20% per annum on cost

  1. The following are proposed:
  1. Final dividend of $0.10 per share to be paid to ordinary shareholders based on shares after bonus issue.
  2. Remaining dividend due is to be paid to preference shareholders on their share balance before redemption.

Required:

  1. Prepare Peter Jordan plc’s Profit and loss and appropriation Account for the year ended 30 April 2006. 
  2. Prepare Peter Jordan plc’s Balance Sheet at 30 April 2006.

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