5.3 Mr Marchesi has always kept his accounts on a cash basis. His new accountant has persuaded him to change to an accruals basis. His income and expenditure account, on a cash basis, for the year ended 31 March 20X0 is as follows:

£ £

230,000 12,000 40,000 6,000 3,000 20,000 81,000 £149,000 During the year Marchesi drew £110,000 from the business account to cover his private expenses. The following information is relevant:

At 1 April 19X9: £

Debtors for fees 50,000 Balance on business bank account 4,000 Prepaid rates 3,500 Prepaid insurance 1,200 Wages payable 800 As at 31 March 20X0:
Debtors for fees 65,000 Prepaid rates 2,500 Prepaid insurance 1,300 Electricity payable 1,000 Wages payable 600 (Assume that there are no other assets.)
Prepare Marchesi’s profit and loss account for the year ended 31 March 20X0 and his balance sheet as at that date.