4.2 Bennett commenced business as a retail trader at the beginning of 20X0. He maintains no formal system of ledger accounts for recording business transactions. An accountant has been asked to prepare the accounts for the year ending 20X1 in order to enable tax liabilities to be agreed. The following balance sheet was prepared as at 1 January 20X1:

Bennett Balance sheet as at 1 January 20X1

£ £ £

Fixed assets Motor vehicle at cost 10,000 Less: accumulated depreciation − 2,000 8,000 Current assets Stock 3,750 Trade debtors 1,060 Prepaid expenses 400 Bank deposit account 650 5,860 Less: Current liabilities Bank overdraft 2,030 Trade creditors 850 Accrued expenses 260

− 3,140 Working capital* 2,720 10,720 Less: Long-term liabilities Loan at 15% − 2,000 8,720 Financed by Capital 8,720 The following information is provided regarding 20X1:
1 An analysis of the business bank accounts provided the following information:
Receipts £ Payments £
Cash sales 32,100 Paid to suppliers 20,850 Proceeds from credit sales 7,560 General expenses 7,560 Legacy from relative 2,650 Drawings 12,500 Bank interest received 50 Motor vehicle 4,000 42,360 44,910 2 During the year, a new motor vehicle was purchased for £4,000; Bennett depreciates vehicles at the rate of 20 per cent on cost.
3 Debtors outstanding at the end of 20X1 amounted to £1,840.
4 Amounts due to suppliers at the end of 20X1 totalled £1,140 and stock was valued at £4,600.
5 Accruals and prepayments of general expenses at the end of 20X1 amounted to £310 and £520, respectively.
The trading and profit and loss account of Bennett’s business for 20X1 and the balance sheet as at 31 December 20X1. (Use the vertical layout for both.)