Prepare the profit and loss account for Top-to-Toe for the year ending 31 December 1988
Using the Top-to-Toe information in Question, prepare a balance sheet for the business as at 31 December 1998.
Question
Naomi Cameron has opened a health and beauty salon called Top-to-Toe, offering a range of slimming and beauty treatments. She is renting the property and sublets one of the rooms 2 days per week to an aromatherapist. The trial balance for the first year of business is as follows:
Top-to-Toe
Trial balance as at 31 December 1998
|
| |
£ |
£ |
|
Sales
|
|
72,100
|
|
Purchases
|
11,160
|
|
|
Wages
|
12,000
|
|
|
Rent
|
18,000
|
|
|
Insurance
|
7,400
|
|
|
Electricity
|
1,840
|
|
|
Advertising
|
3,860
|
|
|
Telephone
|
1,450
|
|
|
Administration expenses
|
1,250
|
|
|
Rental income
|
|
1,500
|
|
Equipment
|
15,000
|
|
|
Debtors
|
1,200
|
|
|
Creditors
|
|
1,620
|
|
Bank
|
1,060
|
|
|
Capital
|
|
15,000
|
|
Drawings during year
|
16,000
|
|
|
|
90,220
|
90,220
|
Notes.
•The stock at the end of the year is valued at £790
•Advertising paid in advance is £260
•It has been decided to depreciate the equipment by 25%
•The following accruals should be allowed:
- administration expenses £160;
- telephone £290:
- electricity £540
•A provision for doubtful debts of 20% of debtors should be made.