The following is the statement of financial position of WW Associates as at 31 December 2017:

1. The owners withdrew £23,000 of equity in cash.

2. Premises were rented at an annual rental of £20,000. During the year, rent of £25,000 was paid to the owner of the premises.

3. Rates on the premises were paid during the year for the period 1 April 2018 to 31 March 2019 and amounted to £2,000.

4. Some machinery (a non-current asset), which was bought on 1 January 2017 for £13,000, has proved to be unsatisfactory. It was part-exchanged for some new machinery on 1 January 2018 and WW Associates paid a cash amount of £6,000. The new machinery would have cost £15,000 had the business bought it without the trade-in.

5. Wages totalling £23,800 were paid during the year. At the end of the year, the business owed £860 of wages.

6. Electricity bills for the four quarters of the year were paid totalling £2,700.

7. Inventories totalling £143,000 were bought on credit.

8. Inventories totalling £12,000 were bought for cash.

9. Sales revenue on credit totalled £211,000 (cost £127,000).

10. Cash sales revenue totalled £42,000 (cost £25,000).

11. Receipts from trade receivables totalled £198,000.

12. Payments to trade payables totalled £156,000.

13. Van running expenses paid totalled £17,500.

The business uses the reducing-balance method of depreciation for non-current assets at the rate of 30 per cent each year.

Required:

Prepare an income statement for the year ended 31 December 2018 and a statement of financial position as at that date.

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Statement of financial position as at 31 December 2017 ASSETS Non-current assets Machinery Current assets Inventories Trade receivables Prepaid expenses (rates) Cash Total assets EQUITY AND LIABILITIES Equity Original Retained earnings Current liabilities Trade payables Accrued expenses (wages) Total equity and liabilities £ 25,300 12,200 21,300 400 8,300 42,200 67,500 25,000 23,900 48,900 16,900 1,700 18,600 67,500