DULT : Gnie Electrique et Informatique Industrielle Introduction to Finance (ITF) Assignment No 1 David Denton set up in business as a plumber a year ago, and he has asked you to act as his accountant. His instructions to you are in the form of the following letter: Dear Henry, I was pleased when you agreed to act as my accountant and look forward to your first visit to check my records. Your proposed fee of 250 per year is acceptable. I regret that the paperwork for the work done during the year is incomplete. I started my business on 1 January 2005, and put 6500 into a business bank account on that date. I brought my van into the firm at that time, and reckon that it was worth 3600 then. I have drawn 90 per week from the business bank account during the year. In my trade it is difficult to take a holiday, but my wife managed to get away for a while. The travel agents bill for 280 was paid out of the business account. I bought the lease of the yard and office for 6500 on 1 April. I borrowed 4000 on that day from Aunt Jane to help pay for the lease. I have agreed to pay her 10% interest per annum, but have been too busy to do anything about this yet. I was lucky enough to meet Miss Prism shortly before I set up on my own, and she has worked for me as an office organizer right from the start. She is paid a salary of 3000 per year. All the bills for the year have been carefully preserved in a tool box, and we analysed them last week. The materials I have bought cost me 9600, but I reckon there was 580 worth left in the yard on 31 December. I have not yet paid for them all, I think we owed 714 to the suppliers on 31 December. I was surprised to see that I had spent 4800 on plumbing equipment, but it should last me five years or so. Electricity bills received up to 30 September came to 1122, but motor expenses were 912, and general expenses 1349 for the year. The insurance premium for the year up to 31 March 2006 was 800. Miss Prism sent out bills to my customers for work done, but some of them are very slow to pay. Altogether the charges made were 29863, but only 25613 had been received by 31 December. Miss Prism thinks that 10% of the remaining bills are not likely to be paid. Other customers for jobs too small to bill have paid 3418 in cash for work done, but I only managed to bank 2600 of this money. I used 400 of the difference to pay the familys grocery bills, and Miss Prism used the rest for further general expenses, except for 123 which was left over in a drawer in the office on 31 December. Kind regards, Yours sincerely, David. You are required to draw up a Profit and Loss Account for the year ended 31 December 2005, and a Balance Sheet as at that date.