Checkers Ltd was incorporated on 1 April 19X5 and took over the business of Black and White, partners, as from 1 January 19XS5. It was agreed that all profits made from 1 January should belong to the company and that the vendors should be entitled to interest on the purchase price from 1 January to date of payment. The purchase price was paid on 31 May 19XS including £1,650 interest.

The following is the profit and loss account for the year to 31 December 19XS:

You are given the following information:

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Salaries of vendors 1,695 Gross profit 28,000 Wages and general expenses 8,640 Rent and rates 860 Distribution expenses 1,680 Commission on sales 700 Bad debts 314 Interest paid to vendors Directors' remuneration 1,650 4,000 Directors' expenses 515 Depreciation Motors Machinery Bank interest Net profit 1,900 575 2,475 168 5,303 28,000 28,000