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ACCT1200 (20) Additional P&L Account and Balance Sheet Question

FW Ltd's trial balance as of December 31, 2015 is provided along with adjustments needed to prepare the profit and loss account and balance sheet for the year ended. Students are asked to prepare: 1) A vertical format profit and loss account for the year ended December 31, 2015 for internal use of the company. 2) A vertical format balance sheet as of December 31, 2015 for internal use of the company using the net worth format.

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94 views2 pages

ACCT1200 (20) Additional P&L Account and Balance Sheet Question

FW Ltd's trial balance as of December 31, 2015 is provided along with adjustments needed to prepare the profit and loss account and balance sheet for the year ended. Students are asked to prepare: 1) A vertical format profit and loss account for the year ended December 31, 2015 for internal use of the company. 2) A vertical format balance sheet as of December 31, 2015 for internal use of the company using the net worth format.

Uploaded by

Taleh Hasanzada
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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LaiACCT1200/20

ADA University, School of Business


ACCT1200 Principles of Financial Accounting, Spring 2020
Additional question – Profit and Loss Account / Balance Sheet

An additional issue on preparing the Profit and Loss Account and the Balance Sheet for
students to practice on.

The following is the trial balance of FW Ltd as on 31 December 2015:


Dr ($) Cr ($)
Ordinary share capital 700,000
10% preference share capital 200,000

10% debentures (repayable 2019) 300,000


Goodwill at cost 255,000
Buildings at cost 1,050,000
Equipment at cost 120,000
Motor vehicles at cost 172,000
Provision for depreciation (accumulated depreciation)
as on 01.01.2015:
buildings 100,000
equipment 24,000
motor vehicles 51,600
Stock 01.01.2015 84,912
Sales 1,022,000
Purchases 439,100
Carriage inwards 6,200
Salaries and wages 192,400
Directors’ remuneration 123,000
Motor expenses 3,120
Rates and insurance 8,690
General expenses 5,600
Debenture interest 15.000
Debtors 186,100
Creditors 113,700
Bank 8,390
General reserve 50,000
Share premium account 100,000

Interim ordinary dividend paid 35,000


Profit and loss account 31.12.2014 43,212
2,704,512 2,704,512

1
The following adjustments are needed:
(a) Stock at 31.12.2015 was $91,413.
(b) Depreciate buildings $10,000, motor vehicles $18,000, equipment $12,000.
(c) Accrue debenture interest $15,000.
(d) Provide for preference dividend $20,000 and final ordinary dividend of 10 per cent.
(e) Transfer $10,000 to general reserve.
(f) Amortize goodwill $30,000.
(g) Provide for corporation tax $50,000.

Required: Prepare (i) the Profit and Loss Account of FW Ltd for the year ended
31 December 2015 for internal use and in vertical format and (ii) the Balance Sheet of FW
Ltd as at 31 December 2015 in vertical format and for internal use and using the “net
worth” format.

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