12.9 The directors of Solar Bubble pic, a trading company, have asked the company's chief accountant to prepare a draft profit and loss account for the year ending 31 January 20X4 in time for them to discuss it at their board meeting on 15 February. The directors prefer to have the information presented in the same way as in the annual financial statements.

The chief accountant identifies the following relevant balances:

£

Administrative expenses 73 959 Opening stock 51 240 Interest payable 1 977 Sales 975 420 Selling and distribution costs 80714 Purchases 603 493 Closing stock 57210 Note the following:

1. £6000 has to be accrued in respect of sales commission for the year ending 31 January 20X4.

2. The corporation tax charge for the year is estimated at £60 625.

3. A preference dividend on the £10 000 8% preference shares must be accrued, and also the directors have proposed paying a final dividend of 5p per share on the 100 000 ordinary shares in issue. No other dividends have been paid in the year.

4. Of the administrative expenses, £1270 relates to prepayment of insurance.

The chief accountant will be using the following format for the draft profit and loss account:

Turnover Cost of sales Gross profit or loss Selling and distribution costs Administrative expenses Operating profit Interest payable and similar charges Profit or loss on ordinary activities before taxation Tax on profit or loss on ordinary activities Profit or loss on ordinary activities after taxation Dividends Retained profit or loss.

You are required to prepare the draft profit and loss account for Solar Bubble pic for the year ending 31 January 20X4.