Balance Sheet Preparation
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1. Authorized share capital of the company is 100 000 ordinary shares of $ 1 each, of which 75,000 were issued and fully paid at $ 1.15 per share.
2. All fixed assets were bought on 1 June 2002,the date the company was incorporated.
Depreciation is applied as follows.
(i) Motor vehicles-- 40 % reducing balance.
(ii) Equipment-- 20 % straight line,after taking into account a 10 % residual balance.
3. A dividend of $ 0.12 per share has been proposed for the year ended 31 May 2005.
4. A provision for doubtful debts of 5% of debtors at 31 May 2005 is to be created.
5. Stock costing $ 2500 had been sent to a customer on a sale or return basis on 25
May 2005.It had been neither returned nor sold by the year end and no entries regarding it had been made in the accounts.
Required:
(a) James De first Ltd's balance sheet as at 31 May 2005 in vertical format.
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This solution gives a step by step explanation of the preparation of a Balance Sheet.
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( a) James De first Ltd's balance sheet as at 31 May 2005 in vertical format.
PAID UP SHARE CAPITAL =75000
SHARE PREMIUM= 11250
MOTOR VEHICLES VALUE DEPRECIATION
JUNE 1 2002 60000 24000
31-May-03 36000 14400
May 31-04 21600 8640
May ...
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