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 debtors 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 20X2 Ursula has the following balances in her accounts:

if Assistant's wages 10 008 Fixed assets 23 360 Opening stock at 1 January 20X2 31 090 Discounts allowed 1 046 CHAPTER 8 ADJUSTMENTS TO THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET: PART 1 | 169 8.10 Note Creditors 25 920 Discounts received 361 Electricity 4 850 Business and water rates 3°899 Warehouse rental 11 070 Telephone 2 663 Debtors 50 354 Opening capital at 1 January 20X2 70 219 Cash at bank 361 Insurance 3414 Delivery costs 4 490 Drawings 33 988 Administration charges 3 242 Purchases 239 285 Sales 326 620 Closing stock at 31 December 20X2 30 048 the following additional information:

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 debt 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 debt should be treated as completely irrecoverable, and should be written off.

At 31 December 20X2 there are accrued charges for electricity of £338.

The accountant's fees in respect of the year are likely to be in the region of

£700. This amount should be accrued.

Two debtors are giving Ursula some cause for concern. Wilson has been owing £398 for almost six months. Wilson assures Ursula via frequent phone calls that the payment will be made when he gets back on his feet after a devastating fire at his offices. And £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 a provision against both of these amounts.

Of the insurance balance of £3414, £622 relates to the next accounting year and should be treated as a prepayment.

Prepare a profit and loss account for Ursula for the year ending 31 December 20X2, and a balance sheet at that date, incorporating all the adjustments noted.