On 1 July 2014 Sergio Bari started a business called MiGame Ltd. The trial balance for the first year is shown below.

Additional information at 30 June 2015:
* Inventory is valued at £890.
* Advertising paid in advance is £260.
* Accrued expenses are lighting and heating £540, telephone and Internet £290 and general expenses £160.
* Estimated current tax payable is £1,200.

Required

(a) Using a spreadsheet, prepare a draft statement of comprehensive income for MiGame Ltd for the year ended 30 June 2015, classifying expenses by nature.

(b) After taking advice from his accountant, Sergio decides to depreciate equipment using the straight-line method over five years, with no resicual value.
He also decides to make an allowance for doubtful receivables and has decided to base it on 10% of opening trade receivables. Make these adjustments to your spreadsheet and generate a revised statement of comprehensive income for MiGame Ltd, classifying expenses by nature.

(c) The accountant'’s final suggestion is that Sergio should reclassify the expenses by function: 50% to distribution costs and 50% to administrative expenses, with the exception of advertising which should be allocated 100% to distribution costs and the allowance for doubtful receivables which should be allocated 100% to administrative expenses. Make these changes to your spreadsheet and generate a revised statement of comprehensive income for MiGame Ltd, classifying the expenses by function.

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MiGame Ltd Trial balance at 30 June 2015 Debit Credit Revenue 75,200 Purchases 12.160 Plant and equipment at cost 25,000 Trade receivables 1.200 Trade payables 1,600 Cash 3,260 Other income 1,200. Salaries 24,000 Rent and rates 18,000 Insurance 7.200 Advertising 860 Lighting and heating 620 Telephone and Internet 450 General expenses 250 Share capital at 1 July 2014 15,000 92,000 93,000