The following trial balance has been extracted from the ledger of Mr. Peter, a sole trader.

Trial Balance as at 31 May 2020

Dr Cr

Kshs. Kshs.

Sales 138,078

Purchases 82,350

Carriage 5,144

Drawings 7,800

Rent, rates and insurance 6,622

Postage and stationery 3,001

Advertising 1,330

Salaries and wages 26,420

Bad debts 877

Allowance for doubtful debts 130

Accounts receivable 12,120

Accounts payable 6,471

Cash in hand 177

Cash at bank 1,002

Inventory as at 1 June 2019 11,927

Equipment at cost 58,000

Accumulated depreciation 19,000

Capital 53,091

216770216,770

The following additional information as at 31 May 2020 is available:

(a)Rent is accrued by Kshs.210.

(b)Rates have been prepaid by Kshs.880.

(c)Kshs. 2,211 of carriage represents carriage inwards on purchases.

(d)Equipment is to be depreciated at 15% per annum using the straight line method.

(e)The allowance for doubtful debts to be increased by Kshs.40.

(f)Inventory at the close of business has been valued at Kshs.13,551.

Required:

Prepare: A statement of profit or loss for the year ending 31 May 2020 (12 Marks)

A statement of financial position as at that date. (8 Marks)