4.9 Ursula is a wholesaler trading in stationery supplies. She sells to offices and shops around the country and at any one time has up to 350 customers due to pay her. She allows 30 days credit but finds that her bigger customers are quite likely to exceed this limit.

At 31 December 2012 Ursula has the following balances in her accounts:

£

Assistant’s wages 10 008 Non-current assets 23 360 Opening inventory at 1 January 2012 31 090 Discounts allowed 1 046 Trade payables 25 920 Discounts received 361 Electricity 4 850 Business and water rates 3 899 Warehouse rental 11 070 Telephone 2 663 Trade receivables 50 354 Opening capital at 1 January 2012 70 219 Cash at bank 361 Insurance 3 414 Delivery costs 4 490 Drawings 33 988 Administration charges 3 242 Purchases 239 285 Revenue 326 620 Closing inventory at 31 December 2012 30 048 Notes:

1. Ursula has recently been informed that a debtor of hers, Wainwright, has left the country owing large amounts of money. Ursula is relieved that the outstanding trade receivable in respect of Wainwright is no more than £672 because, in the past, she has sold large quantities of stationery to Wainwright. Ursula is advised by her accountant that the trade receivable should be treated as completely irrecoverable, and should be written off.

2. At 31 December 2012 there are accrued charges for electricity of £338.

3. The accountant’s fees in respect of the year are likely to be in the region of £700. This amount should be accrued.
4. Two trade receivables amounts are giving Ursula some cause for concern. £398 has been owing by Wilson for almost 6 months. Wilson assures Ursula via frequent telephone calls that the payment will be made when he gets back on his feet after a devastating fire at his offices. £700 is owed for stationery supplies to a friend of Ursula who started a new business a few months ago. The friend assures Ursula that the bill will be paid, but Ursula knows from mutual friends that the new venture is not going well. Ursula decides to make an allowance against both of these amounts.
5. Of the insurance balance of £3414, £622 relates to the next accounting year and should be treated as a prepayment.
Prepare an income statement for Ursula for the year ending 31 December 2012, and a statement of financial position at that date, incorporating all the adjustments noted.