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• # 72921
• Mon 11 Jul 2011 06:48 PM

Hi Everyone,

I am stuck on one of the figures mentioned in answers, really would like to know where this  sum of £ 3000 is coming from!?

Statement of reserves             Profit and loss            Plant replacement    Share premium

Balance at the 1st Jan 20x8     90,000                        30,000                       25000
Profit of the year                      105,200
Dividend paid                            (3,000)
Transfer                                    (20,000)                     20,000                                       
                                                172,200                      50,000                       25,000

I can not workout highlighted figure above.


Please help!

zz ltd summarised balance sheet at the 31st of December 20x7 showed:

Net Assets                          280,000

Called up share capital
-50p ordinary shares           75,000
-£1 8% preferences shares  60,000
Share premium account        25,000
Plant replacement reserve    30,000
profit and loss account          90,000

The operating profit of the year to 31 december 20x8 has been computed as £ 180,000

The following additional information is available

1. Corporation tax is estimated at £ 70,000.
2. An interim dividend of 2p has been paid on the ordinary shares, and one half of the dividend on the preference shares.
3. It is proposed to pay the remaining dividend o the preference shares and final divided of 5p on the ordinary shares.
4. £ 20,000 is to be transfered to the plant replacement reserve.

1. construct the profit and loss account for the year
2. Show the balance sheet at the end of the year to the extent that the information is available.

• Provide bookkeeping and virtual accountancy assistance service in English and French @nckaccountancy.
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• # 72923
• Mon 11 Jul 2011 11:23 PM

Hello

The £3000 is the interim dividend that was paid on the £75,000 ordinary shares.  Since each share's nominal value is 50p, there are 2 shares for each pound, i.e. 2 x 75,000 = £150,000 ordinary shares.  Each of these shares received a dividend of 2p, so the dividend PAID during the year is £0.02 x 150,000= £3000.

The proposed final dividend is not shown in the figures, because it is only proposed at the end of the year, not yet paid.  It is therefore relegated to a footnote to the balance sheet. 

Incidentally I have scribbled a note on this problem that the preference shares are more likely to be a non-current liability rather than part of the shareholder capital as assumed by this problem.....

Regards

• RW
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• # 72933
• Tue 12 Jul 2011 01:20 PM

RW said:

“Hello

The £3000 is the interim dividend that was paid on the £75,000 ordinary shares.  Since each share's nominal value is 50p, there are 2 shares for each pound, i.e. 2 x 75,000 = £150,000 ordinary shares.  Each of these shares received a dividend of 2p, so the dividend PAID during the year is £0.02 x 150,000= £3000.

The proposed final dividend is not shown in the figures, because it is only proposed at the end of the year, not yet paid.  It is therefore relegated to a footnote to the balance sheet. 

Incidentally I have scribbled a note on this problem that the preference shares are more likely to be a non-current liability rather than part of the shareholder capital as assumed by this problem.....

Regards”

• Provide bookkeeping and virtual accountancy assistance service in English and French @nckaccountancy.
  West Essex Twitter:http://nckaccountancy.co.uk
  E-mail: info@nckaccountancy.co.uk
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