TT and Co. is a new business that started trading on 1 January 2019. The following is a summary of transactions that occurred during the first year of trading:

At the end of the year it was clear that a credit customer who owed £400 would not be able to pay any part of the debt. All of the other trade receivables were expected to be settled in full.

The business uses the straight-line method for depreciating non-current assets.

Required:

Prepare a statement of financial position as at 31 December 2019 and an income statement for the year to that date.

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1 The owners introduced £50,000 of equity, which was paid into a bank account opened in the name of the business. 2 Premises were rented from 1 January 2019 at an annual rental of £20,000. During the year, rent of £25,000 was paid to the owner of the premises. 3 Rates (a tax on business premises) were paid during the year as follows: For the period 1 January 2019 to 31 March 2019 For the period 1 April 2019 to 31 March 2020 4 A delivery van was bought on 1 January 2019 for £12,000. This is expected to be used in the business for four years and then to be sold for £2,000. £500 £1,200 5 Wages totalling £33,500 were paid during the year. At the end of the year, the business owed £630 of wages for the last week of the year. 6 Electricity bills for the first three quarters of the year were paid totalling £1,650. After 31 December 2019, but before the financial statements had been finalised for the year, the bill for the last quarter arrived showing a charge of £620. 7 Inventories totalling £143,000 were bought on credit. 8 Inventories totalling £12,000 were bought for cash. 9 Sales revenue on credit totalled £152,000 (cost of sales £74,000). 10 Cash sales revenue totalled £35,000 (cost of sales £16,000). 11 Receipts from trade receivables totalled £132,000. 12 Payments of trade payables totalled £121,000. 13 Van running expenses paid totalled £9,400.