Rowlock Ltd was incorporated on 1 October 2015 to acquire Rowlock’s mail order business, with effect from 1 June 2015.
The purchase consideration was agreed at £35,000 to be satisfied by the issue on 1 December 2015 to Rowlock or his nominee of 20,000 ordinary shares of £1 each, fully paid, and £15,000 7% loan notes.
The entries relating to the transfer were not made in the books which were carried on without a break until 31 May 2016.
On 31 May 2016 the trial balance extracted from the books is:

You also ascertain the following:
1 Inventory on 31 May 2016 amounted to £4,946.
2 The average monthly sales for June, July and August were one-half of those for the remaining months of the year. The gross profit margin was constant throughout the year.
3 Wrapping, postage and packing expenses varied in direct proportion to sales, whilst office expenses were constant each month.
4 Formation expenses are to be written off.
You are required to prepare the statement of profit or loss for the year ending 31 May 2016 apportioned between the periods before and after incorporation, and the statement of financial position as at that date.

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Sales Purchases Wrapping Postage Warehouse rent and rates Packing expenses Office expenses Inventory on 31 May 2015 Director's salary Loan note interest (gross) Non-current assets Current assets (other than inventory) Current liabilities Formation expenses Capital account - Rowlock, 31 May 2015 Drawings account - Rowlock, 31 May 2015 44 38,829 840 441 921 1,890 627 5,261 1,000 525 25,000 9,745 218 500 85,797 £ 52,185 4,162 29,450 85,797