Question 1:

Bholu limited

Trial balance at 31 dec 2010

Particular debit credit
Sales 700,000
Purchase 450,000
Selling &distribution cost 30,000
Administration cost 20,000
Inventory on 1 jan 2010 10,000
Premises at cost 1,300,000
Debtors&creditors 40,000 30,000
8% debentures 100,000
Debenture interest paid  4,000
Ordinary dividend paid for last year 12,000
Interium dividend paid for the yr 8,000
Bank  40,000
General reserve  200,000
Ordinary shares of $1 each 600,000
Share premium 120,000
Revalulation reserve 50,000
Retained earning b/f from the last 114,000
yr 
1,914,000 1,914,000
Additional information
1.inventory on 31dec 2010 was valued at $20,000
2.premises are revalued at $1,550,000
3.corporation tax 30%
4.Right issue of one for four of $1 each at $1.4/share
5 Bonus issue of one for three
6 proposed dividend for the year $20,000
7.transfer to general reserve $10,000

Required
1. income statement (trading &profit &loss acc )
2. statement of changes in equity
3. statement of affairs (balance sheet)
 CHINA

Question 2:

        Debit ($) Credit ($)

Ordinary Shares                                                   200,000
7% redeemable preference shares      100,000
6% non redeemable preference share   50000
Sales 420,000
Purchases                                       270,000
Opening inventory     10,000
Selling and distribution cost       7,000
Admin cost        6000
Ordinary dividend paid for the last year                        6,000
Interim Ord dividend paid for the year                           3,000
Interim dividend paid to redeem shares                   3,500 
 Interim dividend paid to non redeem Preferece Shares    500
Premises             500,000
Receivable & payables                                         30,000               20,000
Motor vehicle    100,000
General reserve                                                               50,000
Profit and loss account                                                                                      16,000
8% debenture                                                                                                    80,000
  936,000                     936,000

Additional Information

1. Closing inventory $50,000

2. Final preference dividend paid to redeemable and nonredeemable preference shares.
3. Final ordinary dividend of 10% is proposed.
4. Prepaid selling and distribution cost $1,000.
5. Accrued admin cost $2,000.
6. Depreciation @ motor vehicle 20% on cost.
7. Corporation tax $17,600.
8. Transfer to general reserve 20,000.

REQUIRED
1. Income Statement.
2. Statement of changes in equity (retained earning column only)
3. Statement of financial position
 Question 3:
The summarized Balance Sheet at 31 December 1993 of Eastly Plc was follows:
$ $

Fixed assets 700,000

Current assets:

Stock 350,000

Debtors 250,000

Bank 60,000

660,000

Less: creditors 100,000 560,000

Capital employed 1260,000

Financed by:

Ordinary share capital of $0.50 550,000

each

8% preference shares of $1 each. 180,000

Share premium account 120,000

Profit and loss account 110,000

Total shareholders funds 960,000

7% Unsecured convertible loan 300,000

stock

Total financing  1260,000

The entry transactions that have taken place since 31 December 1993 are those indicated
below:
i. 1 April 1994: Issued 50,000 new preference shares of $1 each at $1.10 per share.
ii. 20 July 1994: The company made a one for five bonus (scrip) issue of fully paid Ordinary
shares. These shares do not rank for dividend until 1995.
iii. 15 September 1994. The company made a one for four rights issue of Ordinary shares of
$0.50 each at $0.80 per share. This issue was fully subscribed. These shares do not rank
for dividend until 1995.
 iv. 30 December 1994: The company paid the annual interest on the 7% Unsecured
Convertible Loan Stock.

Note: The Company utilizes the share premium account whenever legally possible.
REQUIRED:
The summarized Balance Sheet as at 31December 1994 of Eastly Plc, assuming the only
transaction that have taken place since 31 December 1993 are those indicated above.  

                                                      

Question 4

UK Ltd
Trial Balance as at 31 Dec 2011

Particular Debit Credit

$000 $000
Premises 700
Vehicles 150
Receivables 100
Bank 154
Sales 500
Purchases 310
Inventory at 1st Jan 2011 15
Selling & Distribution cost 45
Administration Cost 40
8 % Debenture (2016) 100
6 % Redeemable Preference shares   $1 (2017) 150
9 % non-redeemable pref. shares 100
Interest paid 3
Dividend paid on redeemable preference shares 5
Dividend paid on non-redeemable pref. share s 3
Final Dividend paid on ordinary  shares (2010) 30
Interim Dividend paid on ordinary shares (2011) 15
Ordinary Shares ($1) 500
Share premium a/c 70
Revaluation A/c 50
General Reserves  40
Profit & Loss A/c 40
Payables 20
1570 1570

Additional Information
1. Inventory at 31 December 2011 $ 25000.
2. Selling & distribution cost accrued & 10,000.
3. Admin cost prepaid $ 12000.
4. Vehicles are depreciated at 10% on cost.
5. Premises are revalued to $ 850,000.
6. Director proposed the following:
a. Debenture interest to be paid
b. Dividend on redeemable & non-redeemable preference shares to be paid.
c. Transfer to general reserves $ 15,000.
d. Final ordinary dividend for the year $ 35,000.
7. Corporation tax $ 45,000
8. Bonus issue of one for five
9. Right issue of one for four at $ 1.30 / share
 Required:
i. Income statement
ii. Statement of changes in equity.
iii. Statement of financial position.
Question 5

The summarized balance sheet of Omicorn Ltd at December 31, 2002 was as follows:

$ 000
Fixed Assets 1900
Net current Assets 1500
3400

10% Debentures 2003/2004 (400)

3000

Share Capital & reserves

Oridnary Shares $1 1000

8% Preference Shares of $ 1 800
Share Premium Account 180
Profit & Loss Account 1020
3000

On January 1, 2003 before any transaction had taken place the following had occurred:
1. redemption of all the debentures at a premium of 5%
2. redemption of all the preference shares at $ 1.25 per share
Shares originally were issued at $ 1.1 per share

Required:

A revised Balance Sheet at January 1, 2003 as if appears after the redemption of Debentures &
Preference Shares.
Question 6:

The following is the Balance Sheet of Joloss plc at April 30, 2002

$ 000 $ 000

Inatnagible fixed Asset – Goodwill 50

Tangible Fixed Asset 650
700

Current Assets
Stock 32
Debtors 80
Bank 6
118
Creditors falling due in a year (42) 76
776

Share Capital & Reserves

Ordinary Share Cpaital of $ 1 1000
Profit & Loss (224)
776

Over the past few years Joloss plc has traded at a loss and no dividends have been paid to the
shareholders during that time.

The directors are of the opinion that goodwill is now value less. The tangible fixed assets are
overvalued by $ 150,000. Some stock which cost $ 10,000 now has no value. Included in
debtors is an amount of $ 16,000 from a customer who has now become insolvent.

The Directors are confident that as a result of improved efficiency and the introduction of new
products the company can look forwards to annual net profit of $ 50,000. They have proposed
to the shareholders a scheme of capital reduction whereby each share holder will receive one
ordinary share with a nominal value of $ 0.55 for every $1 share presently held. This will enable
the debit balance on Profit & Loss account to be eliminated and adjustments to be made to the
Company’s asset to take account of the matters mentioned Above.

The directors policy in future will be to pay 50% of profit as dividend. The shareholders have
agreed to the directors proposals and the capital reduction was effected May 1, 2002.

Required:
Prepare the Balance Sheet as it will appear immediately after the capital reduction and
adjustments.