Photo AI
Company Profit and Loss Morgan Ltd - Leaving Cert Accounting - Question 2 - 2008
Question 2
Company Profit and Loss Morgan Ltd. has an Authorised Capital of 800,000 Ordinary Shares at €1 each and 300,000 5% Preference Shares at €1 each. The company has alr... show full transcript
Worked Solution & Example Answer:Company Profit and Loss Morgan Ltd - Leaving Cert Accounting - Question 2 - 2008
Step 1
Show the Profit and Loss Account for the year ended 31/12/2007
Answer
Profit and Loss Account of Morgan Ltd for the year ended 31/12/2007
| Description | Amount (€) |
|---|---|
| Net Profit for year | 210,000 |
| Less: Interest | (15,000) |
| Less: Taxation | (47,000) |
| Profit after taxation | 148,000 |
| Less: Appropriations | |
| General Reserve | 25,000 |
| Ordinary Dividend (12c per share) | (48,000) |
| Preference Dividend for full year | (10,000) |
| Retained Profit for year | 65,000 |
| Retained Profit brought forward | 18,000 |
| Retained Profits carried forward 31/12/2007 | 245,000 |
Step 2
Prepare a Balance Sheet showing the relevant accounts after making the above provisions and appropriations
Answer
Balance Sheet extract as at 31/12/2007
| Description | Amount (€) |
|---|---|
| Fixed assets/Current assets | |
| Total assets | 1,017,000 |
| Less: Creditors: amount falling due within 1 year | |
| Interest due | (15,000) |
| Taxation | (62,000) |
| Total current liabilities | (77,000) |
| Financed by: | |
| Capital and reserves | |
| Ordinary Shares of €1 each | 800,000 |
| 5% Preference Shares of €1 each | 200,000 |
| General Reserve | 110,000 |
| Profit | 245,000 |
| Shareholders Funds | 955,000 |