The trial balance for Skylar plc as at 31 October 20X7 is shown below.

	'000	'000
Share capital		15,000
Trade payables		3,348
Trade receivables	10,254
Accruals at 31 October 20X7		387
5% bank loan repayable in 10 years		20,000
Cash at bank	7,997
Retained earnings		12,345
Property (freehold buildings) cost	20,000
Plant and equipment cost	38,460
Property (freehold buildings) - accumulated depreciation at 1 November 20X6		2,500
Plant and equipment - accumulated depreciation at 1 November 20X6		21,128
Interest	750
Sales		53,761
Purchases	30,946
Distribution costs	6,654
Administrative expenses	3,652
Inventories as at 1 November 20X6	8,456
Dividends paid	1,300
	128,469	128,469

Further information

(1) Depreciation has not yet been charged. There were no movements in non-current assets during the year. Plant is depreciated at 10% straight-line on a monthly basis taking into account the month of sale or purchase. Freehold buildings are depreciated over their useful life of 40 years. Depreciation on plant is charged to cost of sales. Depreciation on freehold buildings is charged to administrative expenses.

(2) The inventories at the close of business on 31 October 20X7 had a sales value of 12,232,500. Goods are sold at an average mark-up of 25%.

(3) The company paid 48,000 insurance costs in June 20X7, which covered the period from 1 July 20X7 to 30 June 20X8. This was included in administrative expenses in the trial balance.

(4) Interest on the bank loan for the last three months of the year has not been included in the accounts in the trial balance.

(5) The income tax charge for the year has been calculated as 1,254,000.

(6) A payment received from customer Broke plc for 15,000 on 27 October 20X7, which was recorded in the accounting records of Skylar plc, has not been authorised by Broke plc's bank. A liquidator was appointed to Broke plc on 15 November 20X7 and he has confirmed that the payment will not be reissued. Management have advised that Broke plc's total outstanding balance of 30,000 should be written off as an irrecoverable debt and recorded in administrative expenses.

(7) During the year Skylar plc renewed its contract with haulage company Distributers plc. The contract commenced on 1 September 20X7 and no payment has been made to date. The annual contract fee is 200,000.

(8) All of Skylar's goods come with a 12-month warranty. Management estimate that 2% of these warranties will be exercised, and the cost of repair or replacement of these goods will be

250,000 in total. The warranties expense should be presented in administrative expenses.

Requirement

Prepare the statement of profit or loss for Skylar plc for the year ended 31 October 20X7 and the statement of financial position at that date.