7.4 Demare s trial balance as at 30 June 20X2 was as follows:

Dr Cr

£

£

Debtors 16,100 Cost of goods sold 98,000 Demare’s capital account as at 1.7.X1 19,500 Drawings 21,400 Stock 24,000 Bank overdraft 4,500 Creditors 14,000 Motor vehicle at cost 18,000 Motor vehicle - accumulated depreciation at 1.7.X1 3,000 Provision against doubtful debts 1,000 Sales 162,000 Wages expense 9,500 Rent expense 9,000 Rates expense 6,000 Sundry expenses 2,000 204,000 204,000 You are given the following further information:

1. The rent expense for the year amounts to £12,000.

2. The rates are paid in advance, for 15 months up to 30 September 20X2.

3. Depreciation charge for the year to be based on 20 per cent of the reducing balance.

4. Bad debts of £300 should be written off and the provision against doubtful debts should be adjusted to 10 per cent of debtors.

5. Wages payable at 30 June 20X2 were £250.

Required:

Prepare Demare’s profit and loss account for the year ended 30 June 20X2 and his balance sheet as at that date.