Mr Brown is made redundant by his firm and given £1500 in compensation. He takes this money and decides to set himself up in business as a mobile grocer.

The following day he borrows £500 from his bank and carries out the following transactions:

(a) Purchase of a second hand van for £1000 in cash .

(b) Payment of one year's road tax and insurance on the van, £120 cash .

(c) Purchase of stock of groceries for the van, £800 cash .

At the end ofthe first month's trad ing, he takes stock of his situation and finds that he owns the following items:

Van, valued at month end , £960 Stock of goods for resale, at cost £250 Cash in hand , £1250 He is also owed £130 by customers who bought goods on credit. Mr Brown also owes trade suppliers £250 in respect of goods which he has bought on credit terms for resale in his business. The bank loan is still outstanding and interest on this loan for the month amounts to £9. In addition to the above, Brown has withdrawn

£50 per week for four weeks for personal expenditure.

Prepare the following for Mr Brown :

(a) A statement of income for the first month of operations.

(b) A Balance Sheet at the end of the first month of operations.