1
Flyer Ltd started in business on 1 April 2004. Its issued share capital was 200,000 ordinary
shares of £1 each and 100,000 5 per cent preference shares of £1 each. The following information
is available:
l Its net profits for the first two years of business were: 2004/5 £90,200; 2005/6 £84,600.
l Preference dividends were paid for each of these years, whilst ordinary dividends were proposed
as 2004/5 8 per cent and 2005/6 6 per cent.
l Corporation tax, based on the profits of these two years, was: 2004/5 £18,000; 2005/6 £16,000.
l Transfers to general reserve took place: 2004/5 £20,000; 2005/6 £15,000.
Draw up profit and loss appropriation accounts for each of the years ending 31 March 2005 and
2006.