The following is the statement of financial position of TT and Co at the end of its first whole year of trading:

Statement of financial position as at 31 December 2015
	(in pounds)
Assets
Non-current assets
Property, plant and equipment
Delivery van at cost	13000
Depreciation	-2500
	9700
Current assets
Inventories	65000
Trade receivables	19600
Prepaid expenses*	5300
Cash	750
	90650
Total Assets	100150
Equity and liabilities
Equity
Original	50000
Retained Earnings	26900
	76900
Current liabilities
Trade payables	22000
Accrued expenses**	1250
	23,250
Total equity and liabilities	100,150
*The prepaid expenses consisted of rates (300-pound) and rent (5,000-pound).
**The accrued expenses consisted of wages (630-pound) and electricity (620-pound.)

During 2016, the following transaction took place:

1. The owners withdrew equity in the form of cash of 20,000-pound.

2. Premises continued to be rented at an annual rental of 20,000-pound. During the year, rent of 15,000-pound was paid to the owner of the premises.

3. Rate on the premises were paid during the year as follows: for the period 1 April 2016 to 31 March 2017, 1,300-pound.

4. A second delivery van was bought on 1 January 2016 for 13,000-pound. This is expected to be used in the business for four years and then to be sold for 3,000-pound.

5. Wages totaling 36,700-pound were paid during the year. At the end of the year, the business owed 860-pound of wages for the last week of the year.

6. Electricity bills for the first three quarters of the year and 620-pound for the last quarter of the previous year were paid totaling 1,820-pound. After 31 December 2016, but before financial statements had been finalized for the year, the bill for the last quarter arrived showing a charge of 690-pound.

7. Inventories totaling 67,000-pound were bought on credit.

8. Inventories totaling 8,000-pound were bought for cash.

9. Sales revenue on credit totaled 179,000-pound (cost 89,000-pound).

10. Cash sales revenue totaled 54,000-pound (cost 25,000-pound).

11. Receipts from trade receivables totaled 178,000-pound.

12. Payments to trade payables totaled 71,000-pound.

13. Van running expenses paid totaled 16,200-pound.

The business uses the straight-line method for depreciating non-current assets.

Prepare a statement of financial position as at 31 December 2016 and an income statement for the year to that date.

Prepaid Expenses:

Prepaid Expenses are expenses to be incurred in the future but already paid in advance. On the part of the company who paid such expense, this account is recorded as an asset with a normal balance of debit.