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Company Profit and Loss The following information was extracted from the books of Roche Ltd: Roche Ltd has an authorised capital of 800,000 ordinary shares at €1 each and 500,000 6% preference shares at €1 each - Leaving Cert Accounting - Question 3 - 2016
Question 3
Company Profit and Loss The following information was extracted from the books of Roche Ltd: Roche Ltd has an authorised capital of 800,000 ordinary shares at €1 e... show full transcript
Worked Solution & Example Answer:Company Profit and Loss The following information was extracted from the books of Roche Ltd: Roche Ltd has an authorised capital of 800,000 ordinary shares at €1 each and 500,000 6% preference shares at €1 each - Leaving Cert Accounting - Question 3 - 2016
Step 1
Show the profit and loss account for the year ended 31/12/2015
Answer
Profit and Loss Account for the year ended 31/12/2015
Net profit for the year: €170,000
Less Interest:
Interest to provide: €18,000
Net Profit after Interest: €170,000 - €18,000 = €152,000
Less Tax:
Tax to provide: €54,000
Net Profit after Tax: €152,000 - €54,000 = €98,000
Less Appropriation
- Increase in General Reserve: €23,000
- Ordinary Dividend: €36,000
- Preference Dividend: €18,000
Retained Profit
-
Retained Profit for Year:
Net Profit after Tax - (Increase in General Reserve + Ordinary Dividend + Preference Dividend)
= €98,000 - (€23,000 + €36,000 + €18,000)
= €98,000 - €77,000 = €21,000 -
Retained Profit from 01/01/2015: €67,000
Total Retained Profit
- Retained Profits Carried Forward:
Retained Profit for Year + Retained Profit from 01/01/2015
= €21,000 + €67,000 = €88,000
= €333,000
Summary
Total Profits Carried Forward: €333,000
Step 2
Prepare a balance sheet showing the relevant accounts as at 31/12/2015
Answer
Balance Sheet as at 31/12/2015
Fixed Assets and Current Assets:
Total: €1,265,000
Creditors: Amounts Falling Due Within 1 Year:
- Interest Due: €18,000
- Tax Due: €54,000
Total: €72,000
Net Current Liabilities:
Total: €1,193,000
Financed By:
Capital and Reserves
-
Authorised:
- Preference Shares: 500,000
- Ordinary Shares: 300,000
- Total Authorised: 1,300,000
-
Issued:
- Preference Shares: 300,000
- Ordinary Shares: 450,000
- Total Issued: 1,193,000
-
Profit and Loss Balance as at 31/12/2015:
€333,000 -
General Reserve:
€67,000
Shareholders' Funds
Total: €1,193,000