1
Trainsign Ltd has an authorised capital of £500,000, consisting of 350,000 ordinary shares of
£1 each and 150,000 7 per cent preference shares of £1 each. Of these, 260,000 ordinary shares and
90,000 preference shares had been issued when the company first started trading. The following
information is available:
l The company has a financial year end of 31 December. The first three years of business resulted
in net profit as follows: 2002 £62,400; 2003 £81,900; 2004 £114,190.
l Dividends were paid each year on the preference shares. Dividends on the ordinary shares were
proposed as follows: 2002 6 per cent; 2003 8 per cent; 2004 12 per cent.
l Corporation tax, based on the profits of each year, was: 2002 £12,000; 2003 £16,000; 2004
£22,000.
l Transfers to reserves were: general reserve 2002 £10,000, 2003 £18,000, and foreign exchange
reserve 2004 £15,000.
You are to show the profit and loss appropriation accounts for each of the years 2002, 2003 and
2004.