Self-test Nuwaste Trading Ltd was formed with an authorised share capital consisting of 1,500,000 £1 ordinary shares.

The following is the list of balances extracted from the company books at 31 December 2010.

Debtors 480,000 Overdraft 144,000 Debenture interest 9,600 Selling commissions and rent 225,600 Office expenses 48,000 5 per cent debentures 288,000 Creditors 360,000 Freehold land and buildings at cost 960,000 Fixtures and fittings at cost 720,000 Motor vehicles at cost 960,000 Accumulated depreciation at 1 January 2010:

Fixtures and fittings 144,000 Motor vehicles 288,000 Opening stock at 1 Jan 2010 600,000 Purchases 888,000 Sales 1,800,000 Share capital 768,000 Revaluation reserve 168,000 Provision for doubtful debts at 1 January 2010 33,600 Profit and loss account at 1 January 2010 897,600 The following additional information must be taken into account in preparing the financial accounts.

(i) Stock at 31 December 2010 was valued at £398,000.

(ii) Rent paid in advance amounts to £44,000.

(iii) Depreciation is to be charged as follows:

(a) Fixtures and fittings: 20 per cent straight line.

(b) Motor vehicles: 30 per cent reducing balance.

(iv) Provision for doubtful debts should be increased and made equal to 10 per cent of outstanding debtors.

(v) During the year computer consultants were engaged at a cost of £38,000.

The amount has not yet been paid, nor provided for in the accounts.

(vi) It is expected that the audit fees for 2010 will be £20,000.

Prepare the trading and profit and loss account for the year ended 31 December and the balance sheet at that date.