Rickety Racquets was formed by yourself and your four flatmates nine months ago, for the purpose of selling a new revolutionary tennis racquet. Listed below are the details of your first nine months of trading.

Sales Your main customers are the general public and you have already sold, for cash, 1,250 racquets at 150 each. Additionally, you have recently won an order from a local company for 500 racquets. These racquets are to be delivered over the next two years at a discounted price of 120 per racquet. You have just delivered the first batch of 200 racquets for which payment is due in one months time.

Purchases The racquets cost you 90 each. You currently have 300 racquets in stock and you still owe your supplier for the last 80 racquets you received.

Selling & Distribution Expenses Shop rental is 20,000 per annum, paid in advance. All the wage costs of 1,500 for the nine months were paid. Rates for the shop premises are 1,200 per annum and are still outstanding. When you first opened for business, you spent 2,000 on shop fittings. These should last a long time but you prudently decided to depreciate them at 10 per cent of their original cost per annum.

Administration Expenses You paid cash of 600 for sundry expenses.

Investment You set the business up with shares at a nominal value of 50p and each of you put 5,000 of share capital into the company. To help your cash flow initially, you persuaded your rich aunt to lend you, interest-free, a further 10,000.

Dividends Because you felt that the business was doing well, after five months you paid yourselves an interim dividend of 20p per share. Having reached the end of the nine-month period, you are not proposing to pay yourselves a final dividend.

Taxation The Inland Revenue has advised you to provide for a corporation tax payment of 10,000 to cover the nine-month period.

Required:

Prepare an income statement for the nine-month period and a balance sheet at the end of the period for Rickety Racquets Limited.

Rickety Racquets was formed by yourself and your four flatmates nine months ago, for the purpose of selling a new revolutionary tennis racquet. Listed below are the details of your first nine months of trading.

Sales Your main customers are the general public and you have already sold, for cash, 1,250 racquets at 150 each. Additionally, you have recently won an order from a local company for 500 racquets. These racquets are to be delivered over the next two years at a discounted price of 120 per racquet. You have just delivered the first batch of 200 racquets for which payment is due in one months time.

Purchases The racquets cost you 90 each. You currently have 300 racquets in stock and you still owe your supplier for the last 80 racquets you received.

Selling & Distribution Expenses Shop rental is 20,000 per annum, paid in advance. All the wage costs of 1,500 for the nine months were paid. Rates for the shop premises are 1,200 per annum and are still outstanding. When you first opened for business, you spent 2,000 on shop fittings. These should last a long time but you prudently decided to depreciate them at 10 per cent of their original cost per annum.

Administration Expenses You paid cash of 600 for sundry expenses.

Investment You set the business up with shares at a nominal value of 50p and each of you put 5,000 of share capital into the company. To help your cash flow initially, you persuaded your rich aunt to lend you, interest-free, a further 10,000.

Dividends Because you felt that the business was doing well, after five months you paid yourselves an interim dividend of 20p per share. Having reached the end of the nine-month period, you are not proposing to pay yourselves a final dividend.

Taxation The Inland Revenue has advised you to provide for a corporation tax payment of 10,000 to cover the nine-month period.

Required:

Prepare an income statement for the nine-month period and a balance sheet at the end of the period for Rickety Racquets Limited.