e note that during Year 2, £18,000 was paid to the bank as a part repayment of the Year 1 loan.
The accountant has advised that taxation of Year 2’s profits is estimated as being £12,500.
it issued 140,000 ordinary shares at a premium of £0.40 each.
Note: the company’s policy is that the interest paid and dividends paid must be shown within the ‘Cash from Operating Activities’ when presenting its Statement of Cash flows.
Inventories totalling £108,000 were purchased on credit during the year.
In January Year 2, £82,500 was spent on rent of buildings for the next fifteen (15) months.
At the start of Year 2, a vehicle had been purchased for £110,000,
, to be used for 5 years.
Existing equipment also uses reducing balance approach for depreciation and is based on an annual fixed rate of 30%.
sold on credit generated a total revenue of £988,000.
Various administrative expenses amounted to £1,550 each month,
unsold inventories amounted to £86,000, at cost.
in the final week of Year 2 there was another share issue of 27,000 shares at a premium of 30 pence (£0.30) per share.
And finally, it was decided to reward shareholders through cash dividends paid at £0.02p per share.