Trail balance of Ama Akosua at 31 may 2010 are as follows;

	Ghc	Ghc
capital		152,580
Drawings by proprietor	59,700
purchases	730,100
Returns inward	10,760
Returns outwards		37,200
discounts	18,700	9,650
Credit sales		965,200
Cash sales		302,960
Custom duty	117,600
Carriage inwards	29,300
Carriage outwards	17,620
Salesmans commission	7,110
Salesmans salary	39,700
Office salaries	72,070
Bank charges	9,800
Loan interest	4,500
Light and heat	26,530
Sundry expenses	21,000
rent	33,150
Insurance	40,000
Printing and postage	21,030
Advertising	10,440
Irrecoverable debts	17,910
Allowance for receivables		4,370
inventory	76,500
Recievables	107,600
Payables		74,110
Cash at bank	26,340
Cash in hand	750
New delivery van	22,000
Motor expenses	9,860
Furniture and equipment
Cost	80,000
Depreciation at 1 june 2005		24,000
Old delivery van
cost	20,000
Depreciation at 1 June 2005		10,000
Loan account at 9% (repayable in five years)		50,000
	1,630, 070	1,630,070

The following information is relevant:

1. Closing inventory has been valued for accounts purposes at Ghc 84,900
2. The motor van was sold on 31 august 2005 and traded in against the cost of a new van. The trade-in price was GHc 1,400 and the cost of new van was ghc 36,000. No entries have been yet been made for this transaction apart from debiting the GHc 22,000 cash paid to the new delivery van account.
3. Straight line depreciation is to be provided on a monthly basis at the following annual rates;

Motor vans 25%

Furniture and equipment 10%

1. Past experience indicates that an allowance for receivables should be made equivalent to 5% of the closing receivables.
2. An accrual of GHc 3,720 is required in respect of light and heat.
3. A quarters rent to 30 June 2006 amounting to GHc9000 was paid on 2 april 2006. Insurance for the year 31 March 2007 amounting to GHc16,800 was paid on april.

Prepare an income statement and a statement of financial position for the year ended 31 May, 2007.