Reference no: EM131169132

Problem - The following trial balance has been extracted from the books of account of Pisa Limited as at 31 December 2015:

	Dr	Cr
	€'000	€'000
Administrative costs	2,370
Bank		130
Called up share capital:
Ordinary shares of €1 each		800
10 % cumulative preference shares		200
Dividends received		120
Distribution costs	900
Investments at costs	700
Motor Vehicles:
At cost	100
Accumulated depreciation (at 1 January 2015)		40
Interim dividend paid (10c per ordinary share)	80
Equipment:
At cost	7,000
Accumulated depreciation (at 1 january 2015)		4,000
Preference dividend paid	10
Revenue reserves at 1 January 2015		3,000
Purchases	8,000
Sales		13,200
Share premium account		380
Stock	2,000
Creditors		2,080
Debtors	2,790
	23,950	23,950

Additional information:

1) Stock at 31 December 2015: €2,400,000.

2) Depreciation is charged on motor vehicle at a rate of 20% on cost. The equipment relates entirely to distribution activities and depreciation is charged on it at a rate of 50% on the reduced balance.

3) The amount due for corporation tax at the year end and based on the profits for 2015 was estimated to be €530,000.

4) The directors propose to pay a final ordinary dividend of 20c per ordinary share.

Required: Prepare Pisa's profit and loss account for the year to 31 December 2015 and a balance sheet as at that date.