The scenario The Crafty Limited is a small Arts & Crafts company. It had been highly profitable for a number of years and its growth had been quite remarkable. The Chairman and Managing Director, Helen Roger, had always been meticulous in supervising all company activities, but over recent years she has been finding it increasingly difficult to maintain day-to-day control. Helen has been careful to minimise the companys administrative costs. The annual financial accounts had always confirmed her intuitions about the companys progress, so there seemed to be no need for more frequent reporting. However, because of the recent high inflation and cost of living crisis, The Crafty Ltd has been finding it very difficult to win new contracts. It is company policy to depreciate all company vehicles at 20% per annum on a reduced-balance basis. The companys premises are listed buildings, and accordingly, there are restrictions on refurbishment. Helen had noticed deterioration, and she was relieved that these buildings are depreciated annually at 1% on a straight-line basis. Helen has explored various ways to improve the sales of the company, and the Marketing Manager, Tina Hughes also outlined a number of ideas. Tina is proposing to start an online service for the local community; according to her business plan, the sales revenue would increase by 20%. However, Tina estimates that there will be an initial cost of 50,000, and operating costs will increase by 5%. Her second proposal is to allow discounts to students, which she forecasts will yield a 2% increase in revenue, after any additional costs. However, Helen is not convinced that providing service directly to students will increase the revenue. Helen is looking to approach local companies in an effort to promote her business. Helen decides to review the financial position of the company before making any decisions about future plans, and the company accountant prepare the Trial Balance for 31 March 2023 (see over). Trial Balance for The Crafty for the year ended 31 March 2023 Sales 385,000 Sales returns 22,000 Premises : cost 220,000 : opening cumulative depreciation 5,500 Vehicle : cost 132,000 : opening cumulative depreciation 13,200 Purchases 121,000 Purchase returns 11,000 Light and heat 16,500 Rent 16,500 Bank 110,000 Insurance 6,600 Trade debtors 16,500 Bad debts written off during the year 4,400 Bad debt provision (1 April 2022) 275 Trade Creditors 22,000 Loan interest paid 5,500 Long term loan 121,000 Capital 205,275 Notes 1. The vehicles are depreciated at 20% per annum on a reduced-balance basis. 2. Premises are depreciated at 1% per annum on a straight-line basis. 3. The trade debtors figure of 16,500 includes the bad debts of 4,400 and is before any provision. Analysis of the debts shows that additional bad debt of 550 should be written off. 4. After dealing with (3) the bad debt provision is to be maintained at 5% of debts. 5. Light & heat 1,000 still has not yet been paid at the year-end 31 March. 6. The tax for the year is 13,250, of which 6,600 was outstanding at 31 March 2023. 7. The above rent is paid for a year in advance on 1 May 2022. 8. On 1 April 2022, there were 100,000 inventories and on 31 March 2023 there were inventories valued 80,000 unsold.

Prepare the income statement and then the financial statement while balancing the assets= liabilities + equity. No retained earnings should be used. No chatgpt should be used. The calculations should show each and every breakdown.