trial balance

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Bright Light Plc has the following trial balance as at 31 December 2015:

Bright Light Plc

Trial Balance as at 31 December 2015

£

Debit

Credit

Sales

550,000

Cost of Goods Sold

250,000

Loans

180,000

Preference share capital (£170,000 authorised)

120,000

£1 Ordinary share capital (£700,000 authorised)

600,000

Share premium account

100,000

Non-current assets

957,100

General expenses

92,600

Other operating expenses

15,900

Trade receivables

44,600

Cash

28,300

Trade payables

6,500

Retained Earnings as at 1 January 2015

18,000

General Reserve as at 1 January 2015

12,000

Inventories as at 31 December 2015

198,000

1,586,500

1,586,500

The following additional information is given to prepare the adjustments:

Notes

1. A dividend is proposed of 12% on ordinary shares

2. A dividend of 7% for preference shares is proposed

3. A transfer of £4,800 to the general reserve needs to be recorded

4. There is no provision for audit fee yet, which will be £12,800

5. The interest for the year is 8%, which has not been paid and needs to be recorded

6. Corporation tax of £31,260 is to be provided on the profit of the year

7. An additional £8,000 is owing for general expenses

Required:

a. Prepare the Income Statement (Statement of Profit & Loss) for Bright Light Plc for the year ended 31 December 2015

b. Prepare the Statement of Financial Position (Balance Sheet) as at that date.

c. Explain the relationship between the Income Statement, the Statement of Financial Position and the Statement of Cash Flows.

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