Self-test Kitt Ltd Trial balance at 31 December 2009 Ordinary share capital 100,000 7% preference shares 100,000 Share premium account 110,000 Profit and loss account at 1 January 2009 190,000 7% debentures 200,000 Stock at 1 January 2009 400,000 Purchases 700,000 Sales 1,500,000 Sales returns 6,000 Delivery vehicles at cost 200,000 Delivery vehicles: accumulated depr at 1 Jan 09 120,000 Machinery at cost 240,000 Machinery: accumulated depreciation at 1 Jan 09 100,000 Buildings at cost 460,000 Administrative expenses 406,000 Selling and distribution costs 20,000 Creditors 400,000 Debtors 388,000 Interest payable on overdraft 10,000 Bank overdraft 10,000 2,830,000 2,830,000 The following adjustments are to be made to the above trial balance:

(i) Closing stock at 31 December 2009 was £360,000.

(ii) On 19 June 2009 the company paid the insurance account for the year to 30 June 2010. This amount of £8,000 is included in administrative expenses.

(iii) Accountancy fees for the year of £2,000 have not yet been paid.

(iv) A sum of £40,000 included in debtors relates to a customer who has gone bankrupt.

(v) The full amount of interest is to be paid to debenture holders.

(vi) Depreciation for the year is to be charged on the straight line basis.

Rates to be used are 20 per cent on delivery vehicles and 15 per cent on machinery.

(vii) Sales agents were owed December commission. The amount of £12,000 had not yet been entered in the books of the company.

You are required to prepare a profit and loss account and a balance sheet for the year ended 31 December 2009.