The balance sheet of Tyrone’s business as at 31 December 2021 included an allowance for doubtful debts of £4,010 and an allowance for prompt payment discounts of £288. Tyrone is now in the process of preparing his financial statements for the year ended 31 December 2022.

He offers a prompt payment discount of 2.5% for payment within 10 days. Every sale is recorded in his books at its full amount, and discounts allowed are subsequently recorded if and when his customers take them. At the end of the year, he also makes an allowance for prompt payment discounts in respect of amounts outstanding from those customers that he predicts will take advantage of them.

During the year ended 31 December 2022 Tyrone made sales (before deducting any prompt payment discounts) amounting to £564,000; he wrote off irrecoverable debts of £16,290; and prompt payment discounts deducted by customers totalled £8,640. On 31 December 2022, his trade receivables amounted to £70,780, of which £23,400 had been outstanding for under 10 days. Tyrone calculated that 60% of this £23,400 was due from customers that he would normally expect to take the discount.
Finally, after a thorough review, he also decided that an allowance for doubtful debts of £3,120 was appropriate.
Required:

(a) For the year ended 31 December 2022, write up the allowance for doubtful debts, allowance for prompt payment discounts, bad debts expense, and discounts allowed accounts.

(b) Prepare extracts from the income statement for the year ended 31 December 2022 as far as the information allows.