Self-test Muddle Ltd Trial balance at 31 December 2008 Ordinary share capital 220,000 Profit and loss account 380,000 9% debentures 320,000 Opening stock at 1 January 2008 640,000 Purchases 1,150,000 Sales 2,200,000 Sales returns 49,600 Goods returned to suppliers 70,000 Motor vehicles at cost 320,000 Motor vehicles: acc depreciation at 1 January 2008 192,000 Office equipment at cost 384,000 Office equipment: acc depreciation at 1 January 2008 160,000 Fixtures and fittings at cost 436,000 Fixtures and fittings: acc depreciation at 1 January 2008 384,000 Administration expenses 649,600 Selling and distribution costs 102,000 Creditors 540,000 Debtors 620,800 Interest on bank overdraft 46,000 Cash at bank 68,000 4,466,000 4,466,000 Adjustments to the above trial balance:

(i) Closing stock at 31 December 2008 = £493,000.

(ii) Insurance of £5,000 is due for November and December. This is to be included in administration expenses.

(iii) Commission on sales of £8,600 for December is outstanding.

(iv) A provision for doubtful debts of 3 per cent is to be made.

(v) No interest has yet been paid to debenture holders.

(vi) Depreciation is calculated:

(a) on the straight line basis for motor vehicles at 15 per cent.

(b) on the reducing balance for office equipment at 5 per cent and fixtures and fittings at 10 per cent.

You are required to prepare the profit and loss account and a balance sheet for the year ended 31 December 2008.