The trial balance of Michael Orry’s business as at 31 March year 2 is as follows:

Adjustments

a Closing inventory as at 31 March year 2 amounted to £21,000.

b Depreciation is to be provided on plant and machinery on a straight-line basis at 10 per cent per annum.

c Depreciation is to be provided on vehicles on a reducing balance basis at 25 per cent per annum.

Prepare an income statement for the year ended 31 March year 2, and a statement of financial position as at that date.

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Administrative expenses 43,000 Capital as at 31 March year 1 250,000 Cash and bank 170,000 Drawings 36,900 Distribution costs 11,000 Inventories as at 31 March year 1 18,000 Payables 18,000 Plant and machinery at cost 180,000 Provision for depreciation on plant and machinery as at 31 March year 1 108,000 Provision for depreciation on vehicles as at 31 March year 1 21,000 Purchases 120,000 Receivables 16,000 Repairs and maintenance 27,900 Rent and rates 36,200 Sales 390,000 Vehicles at cost 48,000 Wages 80,000 787,000 787,000