Financial Reporting and Ethics - The Institute of Chartered ...

FINANCIAL REPORTING AND ETHICSBad debt 40,000Profit and Loss Account 352,0001,352,000! Step 2. Source of CreditRevaluation surplus on Land & Building:(900,000-700,000) 200,0001,500,000 Ordinary Share Capital (60%) 900,000500,000 Preference Share Capital (50%) 250,000Directors’ loan (30%) 42,0001,392,000! Step 3. Determination of minimum cash requiredNew plant and Machinery 90,000Re-organisation cost 50,000Bank overdraft (40% of 1,140,000) 456,000Creditors 148,000Less Accruals 15,000 133,000Less cash in hand (10,000)Minimum cash required 719,000! Step 4. Source of CashOrdinary Share (capital 1 for 2 @ 0.4(1,500,000 x 0.5 x 0.40) 300,000Preference share capital 500,000 x 1 x 0.5 250,000Debenture holders (50%) 200,000750,000Capital Reduction AccountReorganisation Cost 50,000 Ordinary Share 900,000Patents 360,000 Preference Shares 250,000Plant and Machinery 90,000 Land and Buildings 200,000Stock 400,000 Directors’ Loan 42,000Bad Debt 400,000Accrued Expenses 60,000Profit and Loss 352,000Capital Reserve 40,0001,392,000 1,392,000Patent AccountBalance b/d 500,000 Capital reduction 360,000_______ Balance c/d 140,000500,000 500,00062