Erik has a retail business selling china and glass ornaments from a small shop in a town centre. He has the following balances at his year-end of 30 November:

Note that the amounts due to suppliers include £2200 owed to one company, Ornamental Glass Products Limited. The company has been waiting for payment for this amount since August and Erik has been rung up on several occasions by the company’s chief accountant requesting immediate payment. Erik has an overdraft limit of £4000.

1. Prepare Erik's balance sheet at 30 November. 2. Erik has asked you to advise him on whether he should ask the bank manager for an increase in his overdraft limit. Assess Erik's position at 30 November as shown by the balance sheet.

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Freehold premises Shop fittings, computer, till, etc. Cash float in till Loan from mother (no fixed repayment date) Stock Bank overdraft Creditors - due to suppliers - Creditors due to Customs and Excise for VAT Capital 16 800 8 300 600 2.000 10 300 3 800 3 200 800 26 200