8   The trial balance of Black Ltd as at 31 December 20X5 was as follows:

Â	Dr	Cr
Trade receivables and trade payables	46,800	34,200
Returns inwards	2,450	Â
Productive wages	74,000	Â
Distribution expenses	32,870	Â
Administrative salaries	61,230	Â
Purchases and sales	321,700	552,600
Office expenses	5,630	Â
Returns outwards	Â	4,670
Inventory 1.1.X5	22,300	Â
Ordinary £1 shares	Â	150,000
Debentures 6%	Â	50,000
Accumulated profits 1.1.X5	Â	9,870
Premises	150,000	Â
Vehicles	85,000	Â
Equipment	70,000	Â
Depreciation as at 1.1.X5	Â	Â
Premises	Â	11,600
Equipment	Â	27,500
Vehicles	Â	29,250
Â	Â	–––––––––
Bank	Â	2,290
Â	871,980	871,980
Â	–––––––––	–––––––––

The following information is available, none of which has been taken account of in

the preparation of the trial balance above:

   Inventory as at 31 December 20X5 is valued at £22,000.

   Vehicles are primarily used for distribution, buildings equally between production, distribution and administration and equipment equally between production and administration.

   Buildings are to be depreciated 1% straight line, equipment 20% straight line and vehicles 25% reducing balance.

   Equipment was sold on the 31 December 20X5 for £15,000. This had been credited to sales. The original cost was £20,000 and it had been purchased on 31 December 20X2. No further entries than cash and sales had been made in the books.

 

 

   Bad debts of £2,600 need writing off and a provision for bad debts at the rate of 5% is to be introduced.

   Taxation for the year is estimated at £9,860.

   Accruals of £3,500 for administration expense are required and prepayments of

£5,600 have been identified within distribution expenses.

   The interest on the debentures has not yet been paid.

Prepare the statement of comprehensive income for the year ended 31 December 20X5 and the statement of financial position as at that date in a form suitable for publication.

 

9   Explain the terms rights issue and bonus issue of shares.