1
The following balances remained in the ledger of OK Ltd after preparation of the profit
and loss account for the year ending 31 March 2006
£000s
Stock 52
Debtors 24
Ordinary share capital 100
8% preference share capital 50
Creditors 37
Balance at bank 14
General reserve 30
Profit and loss account balance 2005 11
Net profit for the year to 31 March 2006 29
Fixed assets at cost, less depreciation 167
The directors propose:
(i
) a transfer to general reserve of £10,000;
(ii
) payment of the preference dividend and a 12% dividend on the ordinary shares.
Required:
(a) Prepare a profit and loss appropriation account for the year ended 31 March 2006.
(b) Prepare a balance sheet as at 31 March 2006, showing clearly the ordinary shareholders’ equity,
the total shareholders’ funds and the working capital.