Sharon runs a business selling cards and novelty items from a busy shop in a large shopping centre. She has the following list of account balances at 31 August 20X1:

£

Administration expenses 8219 Purchases 224 069 Fixed assets 27 662 Sundry expenses 1 007 Bank charges 1 830 Premises rental (including business and water rates)

68 000 Opening stock at 1 September 20X0 45517 Sales 464 714 Subscriptions to trade association 818 Electricity 5 337 Property services charge 17 004 Cash at bank 18712 Interest received 460 Assistants' wages 38 830 Mobile phone 766 Travelling expenses 3 600 Phone - shop 3 234 Drawings 61 300 Insurance 5 237 Creditors 24165 Opening capital at 1 September 20X0 42 065 Accountant's and solicitor's fees 2 070 Discounts received 1 808 Closing stock at 31 August 20X1 46 522 Note the following additional information:

1. In a normal year Sharon expects to make a gross profit on sales of 50% and a net profit of 16.3%.

2. An accrual of £1307 for property services charges is required at 31 August 20X1.

3. Not all of the £5237 for insurance relates to the year to 31 August 20X1. Sharon estimates that £465 of the charges relate to the next accounting period.

4. Sharon is still waiting for an electricity bill up to 31 August 20X1. She reads the electricity meter at 31 August and on the basis of the reading estimates that further charges of £1107 will have to be accrued for the year.

5. Some phone charges have not been billed by the year-end. An accrual of £200 should be made.

Prepare a profit and loss account for Sharon for the year ending 31 August 20X1 and a balance sheet at that date. Calculate gross and net profit margins and compare them with the expected performance of the business.