Kimanthi commenced his business of making furniture on 1 April 2021. Due to his limited accounting knowledge he has not maintained proper books of account. You have been engaged to examine his records and come up with appropriate accounts therefrom. You perform an examination of the records and from interviews with Kimanthi, you ascertain the following information:

1. At the commencement of business on 1 April 2021, he deposited Sh.1,200,000 into a business bank account. On the same day he brought into the firm his pickup and estimated that it was worth Sh.660,000 then and that from 1 April 2021 it will have useful life of three years.
2. To increase his working capital he borrowed Sh.400,000 at 15% interest per annum on 1 July 2021 from his sister but no interest has yet been paid.
3. On 1 April 2021, Sally was employed as a clerk at a salary of Sh.720,000 per annum.
4. He had drawn Sh.18,000 per week from the business account for private use during the year.
5. He purchased timber worth Sh.1,960,000 out of which Sh.158,000 worth of stock was retained in the workshop on 31 March 2020. He also spent Sh.960,000 on the purchase of some equipment at the commencement of the business which he estimates will last him five years.
6. Electricity bills received up to 31 January 2022 were Sh.240,000. Bills for the remaining two months were estimated to be Sh.48,000. Motor vehicle expenses were Sh.182,000 while general expenses amounted to Sh.270,000 for the year. Insurance premium for the year to 30 June 2022 was Sh.160,000. All these expenses have been paid by cheque.
7. Rates for the year to June 2022 were Sh.36,000 but these had not been paid.
8. Sally sent out invoices to customers for Sh.6,178,000 but only Sh.5,080,000had been received by 31 March 2022. Debts totaling to Sh.17,000 were abandoned during the year as bad. Other customers for jobs too small to invoice have paid Sh.726,000 in cash for work done of which Sh.560,000 was banked . Kimanthi used Sh.75,000 of the difference to pay for his family's food stuff bought Kenya Charity Sweepstake tickets worth Sh.24,000 and Sally used the rest on general expenses except for Sh.30,100 which was left over in the drawer in the office on 31 March 2022.
9. You agree with Kimanthi that he will pay you Sh.55,000 for accountancy fee.

Required:

1. Profit and loss account for the year ended 31 March 2022. (10 mks)
2. Balance sheet as at 31 March 2022. (10 mks)