5.15 Lime’s business has had liquidity problems for some months. The following trial balance was extracted from his books of account as at 30 September 2007:

Additional information:
1 Stock at 30 September 2007: £68 000.
2 At 30 September 2007, accrual for rates of £2000 and insurance prepaid of £200.
3 Depreciation on office equipment is charged at a rate of 25 per cent on cost. During the year, office equipment costing £4000 had been sold for £500. Accumulated depreciation on this equipment amounted to £3000. Lime’s depreciation policy is to charge a full year’s depreciation in the year of acquisition and none in the year of disposal.
4 Specific bad debts of £13000 are to be written off.
5 The provision for bad and doubtful debts is to be made equal to 10 per cent of outstanding trade debtors as at 30 September 2007.
Required:
Prepare Lime’s trading, and profit and loss account for the year to 30 September 2007, and a balance sheet as at that date.

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Dr Cr 3 Bank Capital 15200 19300 Cash from sale of office equipment 500 Depreciation (at 1 October 2006): office equipment 22000 Drawings 16000 Insurance 1800 Loan (long-term from Cedar) Loan interest Miscellaneous expenses Office equipment, at cost 50000 7500 57 700 44000 Provision for bad and doubtful debts (at 1 October 2006) 2000 Purchases 320000 Rates 10000 Sales 372000 Stock (at 1 October 2006) 36000 Trade creditors 105000 Trade debtors 93000 586000 586000