Frank Jon Ltd has just finished its first year of trading to 31 December 2016. Corporation tax…
Frank Jon Ltd has just finished its first year of trading to 31 December 2016. Corporation tax throughout was 40% and income tax 20%. You are given the following information:
(i) Net trading profit, after adjustment for (ii) but before other adjustments, was £390,000.
(ii) Depreciation of £70,000 was charged. Capital allowances were £110,000.
(iii) An interim dividend of 4% on 0.8 million £1 ordinary shares was paid on 1 July 2016.
(iv) Loan-note interest of £14,000 (net) was paid on 31 December 2016.
(v) Income tax deducted from loan-note interest was paid on 31 January 2017.
(vi) A final dividend of 6% was proposed for the year.
(vii) Corporation tax for the year was estimated to be £145,000.
You are required to:
(a) draw up the double entry accounts recording the above (except bank);
(b) show the relevant extracts from the statement of profit or loss and the statement of financial position.