Poker Ltd was incorporated on 1 September 2013 and took over the business of Heart and Club on 1 June 2013. It was agreed that all profits made from 1 June should belong to the company and that the vendors should be entitled to interest on the purchase price from 1 June to the date of payment. The purchase price was paid on 31 October 2013 including $£ 3,300$ interest.

The following is the income statement extract for the year ending 31 May 2014:

\begin{tabular}{|c|c|c|c|}

\hline \multirow{2}{*}{ Gross nrofit } & $£$ & $£$ & \multirow{2}{*}{\begin{tabular}{c}

$£$ \\

112,000

\end{tabular}} \\

\hline & & & \\

\hline Less Expenses & & & \\

\hline Salaries of Heart and Club & & 6,780 & \\

\hline Wages and qeneral expenses & & 34,560 & \\

\hline Rent & & $3,440 \quad$ & \\

\hline Distribution expenses & & 6,720 & \\

\hline Commission on sales & & 2,800 & \\

\hline Bad debts & & 1,256 & \\

\hline Interest paid to vendors & & 6,600 & \\

\hline Directors' remuneration & & 16,000 & \\

\hline Directors' expenses & & $2,060 \quad$ & \\

\hline \multicolumn{4}{|l|}{\begin{tabular}{l}

Depreciation

\end{tabular}} \\

\hline Vans & 7,600 & & \\

\hline Machinery & $2,300 \quad$ & & \\

\hline & & 9,900 & \\

\hline Bank interest & & $672 \quad$ & $(90,788)$ \\

\hline Net profit & & & 21,212 \\

\hline

\end{tabular}

You are given the following information:

1 Sales amounted to $£ 80,000$ for the three months to 31 August 2013 and $£ 200,000$ for the nine months to 31 May 2014. Gross profit is at a uniform rate of $40 \%$ of selling price throughout the year, and commission at a rate of $1 \%$ is paid on all sales.

2 Salaries of $£ 6,780$ were paid to the partners for their assistance in running the business up to 31 August 2013.

3 The bad debts written off are:

(a) a debt of $£ 416$ taken over from the vendors;

(b) a debt of $£ 840$ in respect of goods sold in November 2013.
4 On 1 June 2013, two vans were bought for $£ 28,000$ and machinery for $£ 20,000$. On 1 August 2013 another van was bought for $£ 12,000$ and on 1 March 2014, another machine was added for $£ 12,000$. Depreciation has been written off vans at $20 \%$ per annum, and machinery at $10 \%$ per annum. Depreciation is written off for each month in which an asset is owned.
5 Wages and general expenses and rent all accrued at an even rate throughout the year.
6 The bank granted an overdraft facility in September 2013.
Assuming all calendar months are of equal length:

(a) set out the income statement in columnar form, so as to distinguish between the period prior to the company's incorporation and the period after incorporation;

(b) state how you would deal with the profit prior to incorporation;

(c) state how you would deal with the results prior to incorporation if they had turned out to be a net loss.