7.2 Tip was established and started trading on 1 January 20X1 and draws up its accounts to 31 December each year. Its purchases and disposals of fixed assets over the subsequent three years were as follows:

Asset Date of purchase Cost Date of disposal Proceeds on disposal

£ £

A 1 January 20X1 5,000 – –

B 1 January 20X1 2,000 1 January 20X3 900 C 1 January 20X3 7,000 – –

Use this data to:

(a) prepare the fixed assets at cost, accumulated depreciation and disposal of fixed assets accounts based on straight-line depreciation of 20 per cent per year for 20X1, 20X2 and 20X3; and

(b) show the fixed asset extracts from the balance sheets at the end of each year.