Terry began trading on 1 June 1997. His transactions during the year to 31 May 1998 included the following:

(a) He borrowed £5,000 from his bank, on the understanding that no repayments would be made during his first year of trading. The bank charged 10% per annum interest on this loan.

(b) He paid rent of £1,400 covering the period 1 June 1997 to 31 December 1997, and a further £3,000 covering the year to 31 December 1998.

(c) He paid wages of £1,300 per month. This included £500 per month for himself.

(d) He bought stock from a single supplier costing £23,670. At the end of the year he still owed £2,570 to this supplier. The supplier offered a 1%

discount for prompt payment and Terry always took advantage of this discount.

(e) He sold stock to customers for £34,990. At the end of the year, all except

£1,820 of this had been received from the customers.

(f) Stock which had cost Terry £2,560 remained unsold on 31 May 1998.

(g) He paid electricity bills of £1,740 and telephone bills of £1,130. Accrued expenses at 31 May 1998 were estimated to be electricity £120 and telephone £80.

(h) He paid £1,200 to advertise his business in "Yellow Pages" for the 12-

month period from 1 July 1997 to 30 June 1998.

(i) On 31 May 1998 (the very last day of his accounting year) he bought a motor van for £6,900.

Required:

Prepare Terry's trading and profit and loss account for the year to 31 May 1998.