The following is the balance sheet of TT and Co at the end of its first year of trading (from Self-assessment question 3.1):

TT and Co Balance sheet as at 31 December 2005

££ £

Non-current assets Motor van: Cost 12,000 Depreciation (2,500)

9,500 Current assets Inventories 65,000 Trade receivables 19,600 Prepaid expenses* 5,300 Cash 750 90,650 Less Current liabilities Trade payables 22,000 Accrued expenses† 1,250 2

3,250 67,400 £76,900 Capital Original 50,000 Add Profit 26,900 £76,900 * The prepaid expenses consisted of rates (£300) and rent (£5,000).
† The accrued expenses consisted of wages (£630) and electricity (£620).