Question 6 36.6 The following details concern Terraxa Ltd in relation to its financial year ended 31 May 2020: Cr Dr 27,435 4,280 541,470 1,567 222,003 81,221 87,600 18,289 56,769 Trial balance as at 31 May 2020: Gas Dividends paid Sales Carriage inwards Purchases Other operating expenses Accounts receivable Maintenance Accounts payable Machinery: at cost Vans: at cost Machinery: accumulated depreciation at 1 June 2019 Vans: accumulated depreciation at 1 June 2019 Inventory as at 1 June 2019 Cash at bank 7% loan notes 2030-2032 Loan note interest paid Bad debt expense Allowance for doubtful debts at 1 June 2019 Ordinary shares of 10p each Retained profits at 1 June 2019 390,720 314,460 92,220 72,000 18,424 374 173,000 6,055 15,598 2,641 55,000 194,926 1,188,026 1,188,026 Vans: Additional information: () The company's inventory was counted at 31 May 2020 and was valued at 19,404. (1) Depreciation is to be charged at the following rates per annum: Machinery: (reducing balance) 30% (straight-line) 20% (ii) The amount shown for maintenance on the trial balance includes a payment of 8,580, which represents an annual maintenance contract to 31 March 2021. (iv) Gas charges incurred for which no invoices have yet been received amount to a total of 5,335. (1) The allowance for doubtful debts is to be set at 4% of accounts receivable. (vi) The loan note interest is paid in two annual instalments and the second instalment needs to be provided for (viiThe corporation tax charge on the profit for the year is estimated to be 3,000. Required: Prepare, for internal use purposes, an income statement for the year ended 31 May 2020 and a balance sheet as at that date. 4