Nellie sells boots from her market stall and also carries out a boot repair service. This activity has never made much of a profit, but some of Nellie's long-standing customers continue to expect the service. Nellie's year-end is 31 May, a time of year when boot sales are low and when she has very little stock on hand. She counts and values her stock on 31 May 20X1 and arrives at a value of £2904.

You are employed in the office of Naylor & Co., Nellie's accountants. Your boss, Nasser, asks you to prepare her accounts for the year to 31 May 20X1. As well as the information about stock, you are given the following list of items as at the year-end date:

£

Stock at 1 June 20X0 2 672 Stall rental and service charge 3 844 Bank interest received 320 Sundry expenses 313 Saturday assistant's wages 1 200 Repairs income 1 801 Purchases 42 640 Creditors 2 497 Accountant's fees and other administration 862 Insurance 574 Cash at bank 3 422 Drawings 14257 Repairs expenses 1 742 Motor expenses 1 252 Sales of boots 63 060 Capital at 1 June 20X0 6 060 Fixed assets - display stands 960 Nasser will be having a meeting with Nellie next week to talk about her business. She feels that she is not doing as well as in previous years. Her gross profit for the year ended 31 May 20X0 was £22 831 on sales of £67 760. In addition to preparing the accounts, Nasser would like you to calculate the actual and percentage changes in gross profit and sales between 20X0 and 20X1, and to compare the gross profit margins between the two years. He would also like you to make some preliminary comments on Nellie's business performance.