Prepare the trading, profit and loss account for the year ended 31 December 2002… 1 answer below »

The following balances were extracted from the books of Tall Ltd. as at 31 December 2002.

N$ N$

Authorised & Issued Ordinary Share Capital 250,000

7.5% Preference Shares of N$1 each fully paid 100,000

Purchases and Sales 380,000 900,000

Trade Debtors and creditors 65,000 46,000

Premises at cost 220,000

Accumulated Depreciation on Premises 62,000

Motor Vehicles at cost 60,000

Accumulated Depreciation on Motor Vehicles 30,000

Fixtures & Fittings at cost 35,000

Accumulated Depreciation on Fixtures & Fittings 10,000

8% Loan (repayable 2009) 25,000

Trade Investments 150,000

Bank 6,500

Provision for Doubtful Debts at 1.1.02 3,400

Selling & Distribution expenses 126,500

Administrative expenses 322,500

Interest received on investment 5,000

Interest paid on loan 1,000

Stock at 1.1.02 72,000

Stock and loss balance c/fwd 1.1.02 _______ _6,500

1,438,500 1,438,500

The following items need to be taken into account:

1. Closing stock at 31.12.02 was N$85,000.

2. The directors propose that the preference share dividend

and an ordinary share dividend of 12% be provided.

3. Provision for doubtful debts at 31.12.02 is to be 6% of trade debtors.

4. Administrative expenses prepaid at 31.12.02 amounted to N$2,500.

5. Selling and distribution expenses outstanding at 31.12.02 amounted to N$3,500.

6. The half- year’s interest on the loan should be provided.

7. Provide for corporation tax for the year of N$25,000.

8. Provide for depreciation as follows:

Premises 2% Straight line

Motor Vehicles 10% reducing balance

Fixtures & Fittings 5% straight line

Required:

(a) Prepare the trading, profit and loss account for the year ended 31 December 2002

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