The trial balance of Ellie’s Ltd as at 31 December year 1 was as follows:

Additional information

a. Inventories as at 31 December year 1 was £21,000.

b. Rent prepaid as at 31 December year 1 was £400.

c. Accrued electricity as at 31 December year 1 was £200.

d. A receivable of £500 is to be written off.

e. The provision for bad debts is to be increased to £650.

f. Depreciation is to be provided for the year as follows: fixtures and fittings – 25 per cent per annum on a reducing balance basis;

and vehicles –25 per cent per annum on a straight-line basis.

g. The company’s accounting policy is to charge no depreciation in the year that a non-current asset is sold.

h. Corporation tax of £15,000 is to be provided.

Prepare an income statement for the year ended 31 December year 1 and a statement of financial position as at that date.

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Debit Credit Inventory at 1 January year 1 19,500 Trade receivables 61,000 Trade payables 13,400 Share capital: 100 1 shares 248,100 Share premium 11,600 Retained profits at 1 January year 1 17,100 Printing and stationery 2,400 Provision for bad debts Wages and salaries Purchases Sales revenue Cash at bank Rent Electricity Fixtures and fittings at cost 600 12,300 167,000 248,300 1,450 1,500 1,100 12,000 Fixtures and fittings: provision for depreciation at 31 December year o 2,000 Van at cost 8,400 Van: provision for depreciation at 31 December year O Van: disposal proceeds 4,200 4,750