5.7 Theodore has run a management consultancy for a few years. His trial balance at 31 December 20X2 was as follows:

Dr Cr

£

£

Cash at bank 33,400 Freehold property 180,000 Capital at 1.1.X2 73,000 Long-term loan 100,000 Creditors 5,000 Debtors 38,000 Fees earned 225,000 Interest paid 9,000 Drawings 32,000 Heating and lighting 9,600 Other office expenses 22,800 Wages and salaries 145,000 436,400 436,400 The following information is available:

1. Theodore owes a further £1,000 in interest at 31 December 20X2.

2. Office expenses include a payment for rates of £4,500 covering the period from 1 October 20X2 to 31 March 20X3.

3. Office expenses amounting to £3,000 have been incurred but not entered in the books at 31 December 20X2.

Prepare Theodore’s profit and loss account for the year ended 31 December 20X2 and his balance sheet as at that date.