the word limit for it is 600 and i have 7 hours to submit D:

BACKGROUND Solent Trading (ST) is a small retail business, based in the UK, operating within the education sector. It specialises in sourcing IT equipment from a variety of local and international suppliers which it then sells on to universities in the UK to support the university teaching. ST was set up by Alex Collins in June 2019. Alex had previously spent 13 years working within educational supply businesses across Hampshire, and had decided to use his expertise, contacts and experience to strike out alone. Alex used 90,000 of his own savings, and 40,000 of bank financing from Lloyds Bank. The bank manager was happy to lend Alex the money based on a sound business case forecasting that ST would break-even within the first year of trading. Once the financing had been secured, Alex busied himself setting up the business. He found - warehousing and office premises and set about securing supplier relationships so that he could source inventory. He also recruited a warehouse manager and an IT manager, together with a part-time office manager and a salesperson whom he intended to pay on a commission basis. As is common practice in this sector, revenues originate from a combination of online orders (via a business website designed by the IT manager) and a catalogue sent directly to universities. Alex's extensive contact list in the industry meant that the business could start with a healthy-looking customer database. The initial start-up activities of ST were complete by the end of 2019 and ST commenced trading in January 2020. It is now the end of the first year of trading and Alex is keen to understand how the business has been doing financially. Alex freely admits that numbers are not his thing. The office manager has recorded all transactions throughout the year but is now seeking the help of an accountant to make sense of these numbers and perhaps give the business some advice on the way forward. You have been contacted by Alex to help with this. From the raw transaction data, you have produced a trial balance and the office manager has provided you with some further information. (Exhibit 1) 2. Draft an email response to Alex Collins's email in exhibit 2, explaining the accruals basis of accounting, answering the issues raised regarding the trial balance and providing appropriate examples in both cases to support your answers. (40 MARKS) Exhibit 2- Email From: Alex Collins (ST) To: An accountant Date: 10 Feb 2021 Subject: Bank and trial balance Good morning, Many thanks for sending over the draft accounts. I must confess I am rather confused as to how the 'profit for the year in the draft financial statements has been calculated. I have been closely monitoring our cash position with our online banking system and as your statement of financial position shows, we ended the year with 9,750 in the bank. Could you please explain the basis of accounting and why the profit does not equal the bank balance at the end of the year as I would have expected. Furthermore, could you please explain what a trial balance is, how it is produced and whether or not it will ensure the financial statements are always correct as indicated by the office manager? Regards Alex Collins (ST) Answer for question 1) amount 837,350.00 12,000.00 849,350.00 statement of profit or loss particulars amount sales sundry income total income expenses purchases 516,000.00 less: inventory - 80,000.00 cost of goods sold carriage inwards rent carriage outwards telephone gas and electricity IT expenses publishing and printing expenses insurance wages salaries, and sales commission depreciation motor expenses finance cost 436,000.00 9,000.00 76,500.00 40,500.00 12,000.00 17,050.00 7,500.00 6,000.00 5,750.00 162,000.00 9,750.00 6,000.00 2,100.00 790,150.00 total expenses net profit 59,200.00 statement of financial position amount particulars ASSETS current assets trader receivables prepaid rent prepaid insurance inventory bank total current assets non-current assets office equipment motor vehicles furniture and fixtures total non-current assets total assets 51,000.00 6,000.00 7,000.00 80,000.00 9,750.00 153,750.00 12,000.00 36,500.00 33,000.00 81,500.00 235,250.00 equity and liability current liabilities trade payables other payables gas and electricity provision bank loans total current liabilities EQUITY capital less: drawings add: net income total owner's equity total equity and liability 21,750.00 13,500.00 4,300.00 40,000.00 79,550.00 102,500.00 - 6,000.00 59,200.00 155,700.00 235,250.00