The following is the statement of financial position of WW Associates as at 31 December 2019:

During 2020, the following transactions took place:

1. The owners withdrew equity in the form of cash of £23,000.

2. Premises were rented at an annual rental of £20,000. During the year, rent of £25,000 was paid to the owner of the premises.

3. Rates on the premises were paid during the year for the period 1 April 2020 to 31 March 2021 and amounted to £2,000.

4. Some machinery (a non-current asset), which was bought on 1 January 2019 for £13,000, has proved to be unsatisfactory. It was part-exchanged for some new machinery on 1 January 2020 and WW Associates paid a cash amount of £6,000. The new machinery would have cost £15,000 had the business bought it without the trade-in.

5. Wages totalling £23,800 were paid during the year. At the end of the year, the business owed £860 of wages.

6. Electricity bills for the four quarters of the year were paid, totalling £2,700.

7. Inventories totalling £143,000 were bought on credit.

8. Inventories totalling £12,000 were bought for cash.

9. Sales revenue on credit totalled £211,000 (cost £127,000).

10. Cash sales revenue totalled £42,000 (cost £25,000).

11. Receipts from trade receivables totalled £198,000.

12. Payments to trade payables totalled £156,000.

13. Van running expenses paid totalled £17,500.

The business uses the reducing-balance method of depreciation for non-current assets at the rate of 30 per cent each year.

Required:

Prepare an income statement for the year ended 31 December 2020 and a statement of financial position as at that date.

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ASSETS Non-current assets Machinery Current assets Inventories Statement of financial position as at 31 December 2019 Trade receivables Prepaid expenses (rates) Cash Total assets EQUITY AND LIABILITIES Equity Original Retained earnings Current liabilities Trade payables Accrued expenses (wages) Total equity and liabilities כין 25,300 12,200 21,300 400 8,300 42,200 67,500 25,000 23,900 48,900 16,900 1,700 18,600 67,500