On 1 January Year 1, Angela’s Employment Agency was formed. The owner contributed £300,000 in cash which was immediately used to purchase a building. It is estimated to have a 20-year life and a residual value of £200,000. During Year 1 the agency collects £80,000 in fee income and pays £60,000 in wages and other costs. Record the transactions and events of Year 1 in an accounting equation spreadsheet. (See Table 8.3 for an illustration.) Prepare the statement of financial position (balance sheet) at the end of Year 1 and the income statement (profit and loss account) for Year 1.

226 Part 3 Recognition in financial statements AppendixLO1