XY Limitedcommenced trading on 1 February with fully paid issued sharecapital of 500

000, Fixed Assets of 275 000 and Cash atBank of 225 000. By the end of April, the following

transactionshad taken place:

1. Purchases on credit from suppliers amounted to572 500 of which 525 000 was raw

materialsand 47 500 was for items classified as productionoverhead.

2. Wages incurred for all staff were 675 000, representedby cash paid 500 000 and wage

deductions of175 000 in respect of income tax etc.