Mr Chai has been trading for some years as a wine merchant. The following list of balances has been extracted from his ledger as at 30 April 19X7, the end of his most recent financial year.

Capital Sales Trade creditors Returns out Provision for bad debts Discounts allowed Discounts received Purchases Returns inwards Carriage outwards Drawings Carriage inwards Rent, rates and insurance Heating and lighting Postage, stationery and telephone Advertising Salaries and wages Bad debts Cash on hand Cash at bank Stock as at 1 May 19X6 Trade debtors Fixtures and fittings - at cost Provision for depreciation on fixtures and fittings - as at 30 April 19X7 Depreciation The following additional information as at 30 April 19X7 is available:

(a) Stock at the close of business was valued at £17,750.

(b) Insurances have been prepaid by £1,120.

(c) Heating and lighting is accrued by £1,360.

(d) Rates have been prepaid by £5,435.

(e) The provision for bad debts is to be adjusted so that it is 3% of trade debtors.

Required:

Prepare Mr Chai’s trading and profit and loss account for the year ended 30 April 19X7 and a balance sheet as at that date. Note: vertical style preferred.