Sarah is the sole distributor agent in her area for Holmes Kitchen Tiles. Sarah purchases the titles at a trade discount and annually in May receives an agency commission of 1% of the business purchases for the year ended on the previous 31 March.
For several years Sarah has obtained a Gross Profit of 40% on all sales. In a burglary in January 2007 Sarah lost stock costing 4,000 £ as well as many accounting records. However, after careful investigations, the following information has been obtained covering the year ended 31.03.2007
a) Assets and Liabilities at 31.03.2006 are as follows:
| Building at cost |
10,000 |
| Provision for depreciation |
6,000 |
| Motor vehicle at cost |
5,000 |
| Provision for depreciation |
2,000 |
| Stock at cost |
3,200 |
| Trade Debtors (for sales) |
6,300 |
| Agency commission due |
300 |
| Prepayments (Trade expenses) |
120 |
| Balance at bank |
4,310 |
| Trade Creditors |
4,200 |
| Accrued vehicle expenses |
230 |
b) Sarah will receive an agency commission of 440£ on 01.05.2007
c) Stock, at cost, 31.03.2007 was valued at 3,000 £ more than last year.
d) In October 2006 stock costing 1,000 £ was damaged by damp and had to be scrapped as worthless.
e) Trade Creditors at 31.03.2007 related entirely to goods received whose list prices totalled 9,500 £
f) Discounts allowed amounted to 1,620 £ whilst discounts received were 1,200 £. A further 350 £ of discount received will fall due on the creditor balance.
g) Trade expenses prepaid at 31.03.2007 totalled 80 £
h) Vehicle expenses for the year ended 31.03.2007 amounted to 7,020 £
i) Trade Debtors (for sales) at 31.03.2007 were 6,700 £
j) All receipts are passed through the bank account.
k) Depreciation is provided annually at the rate of 5% on cost for buildings and 20% on cost for motor vehicles.
l) Commission received are paid directly to the bank account
m) In addition to the payments for purchases, the bank payments were as follows:
| Vehicle Expenses |
6,720 £ |
| Wages |
4,300 £ |
| Trade Expenses |
7,360 £ |
n) Sarah is not insured against loss of stock owing to burglary or damage to stock caused by damp
Prepare Sarah's P&L for the year ended 31.03.2007 and BS on that date.