The trial balance of Black Ltd as at 31 December 20X5 was as follows:

The following information is available none of which has been taken account of in the preparation of the trial balance above:

(a) Inventory as at 31 December 20X5 is valued at £22,000.

(b) Vehicles are primarily used for distribution, buildings equally between production, distribution and administration and equipment equally between production and administration.

(c) Buildings are to be depreciated 1% straight line, equipment 20% straight line and vehicles 25% reducing balance.

(d) Equipment was sold on the 31 December 20X5 for £15,000. This had been credited to sales. The original cost was £20,000 and it had been purchased on 31 December 20X2. No further entries than cash and sales had been made in the books.

(e) Bad debts of £2,600 need writing off and a provision for bad debts at the rate of 5% is to be introduced.

(f) Taxation for the year is estimated at £9,860.

(g) Accruals of £3,500 for administration expense are required and prepayments of

£5,600 have been identified within distribution expenses.

(h) The interest on the debentures has not yet been paid.

Prepare the income statement for the year ended 31 December 20X5 and the balance sheet as at that date in a form suitable for publication.

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Dr Cr Debtors and creditors 46,800 34,200 Returns inwards 2,450 Productive wages 74,000 Distribution expenses 32,870 Administrative salaries 61,230 Purchases and sales 321,700 552,600 Office expenses 5,630 Returns outwards 4,670 Inventory 1.1.X5 22,300 Ordinary 1 shares 150,000 Debentures 6% 50,000 Accumulated profits 1.1.X5 9,870 Premises 150,000 Vehicles 85,000 Equipment 70,000 Depreciation as at 1.1.X5 Premises 11,600 Equipment 27,500 Vehicles Bank 29,250 2,290 871,980 871,980