Chi Ltd
 Date: 31 December 2023

Trial Balance:

Description	Dr (£000)	Cr (£000)
Bank overdraft		135
Called-up share capital (ordinary shares of £1 each)		3,600
Accounts payable		165
Accounts receivable	145
Non-current assets: at cost	530
Accumulated depreciation (at 1 January 2023)		350
Marketing expenses	330
Office expenses	360
Retained profits (at 1 January 2023)		430
Production expenses	4,500
Purchases (net of VAT)	5,900
Sales (amounts invoiced, net of VAT)		11,800
Inventory (at 1 January 2023)	350
Trade accounts payable		380
Trade accounts receivable	4,600
Total	11,070	11,070

Additional Information:

1. Inventory at 31 December 2023 was valued at £390,000.
2. At 31 December 2023, £130,000 was owing for office expenses, and £120,000 had been paid in advance for marketing expenses.
3. A customer had gone into liquidation owing the company £520,000; the company does not expect to recover any of this debt.
4. The company decides to set up an allowance for doubtful debts amounting to 5% of the outstanding trade accounts receivable as at the end of each financial year.
5. Depreciation is to be charged on the non-current assets at a rate of 20% on cost; it is to be apportioned as follows:
   • Marketing: 30%
   • Office: 20%
   • Production: 50%

Note:
 There were no acquisitions or disposals of non-current assets during the year to 31 December 2023.

Required:
 Prepare Chi Ltd’s income statement for the year ending 31 December 2023, and a balance sheet as at that date.