RJ commenced business on 1 January 2014. He sells refrigerators, all of one standard type, on hire purchase terms. The total amount, including interest, payable for each refrigerator, is $£ 300$. Customers are required to pay an initial deposit of $£ 60$, followed by eight quarterly instalments of $£ 30$ each. The cost of each refrigerator to RJ is $£ 200$.

The following trial balance was extracted from RJ's books as on 31 December 2014.

Trial Balance

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

\hline Capital & $£$ & $\underset{100,000}{£}$ \\

\hline Non-current assets & 10,000 & \\

\hline Drawings & 4,000 & \\

\hline Bank overdraft & & 19,600 \\

\hline Creditors & & 16,600 \\

\hline Purchases & 180,000 & \\

\hline Cash collected from customers & & 76,500 \\

\hline Bank interest & 400 & \\

\hline Wages and salaries & 12,800 & \\

\hline General expenses & 5,500 & \\

\hline

\end{tabular}

850 machines were sold on hire purchase terms during 2014.

The annual accounts are prepared on the basis of taking credit for profit (including interest) in proportion to the cash collected from customers.

You are required to prepare the hire purchase trading account and income statement for the year 2014 and statement of financial position as on 31 December 2014.

Ignore depreciation of non-current assets.

Show your calculations.

(Institute of Chartered Secretaries and Administrators)