Tom Kelaart, registered for VAT, is familiar with accounting for VAT and has extracted the year-end Trial Balance as shown. He informs you that:

(a) Invoices received after 31 December 2012 confirm that VAT-inclusive prices of £21,150 and £4,935 remain unpaid in respect of furniture (delivered on 1 October 2012) and goods for sale (delivered on 29 December 2012). These are yet to be accounted for.

(b) In addition December salary amounting to £4,500 remains unpaid.

(c) Inventory conducted on 31 December 2012 reveals the cost (inclusive of VAT) of goods in hand to be £17,390. However, goods taken by Tom for his own use have not been accounted for. The cost of these goods, inclusive of VAT, was £4,700.

(d) Furniture is depreciated at 10% per annum using the reducing balance method and vehicles at 20% per annum on cost. Depreciation is time apportioned for the nearest months of use.

(e) Tom wishes to set up an Allowance for doubtful debts at 5% of trade receivables.

(f) The VAT rate is 17.5%.

Required: Prepare the Statement of income for the year ended 31 December 2012 and the Statement of financial position as at that date.

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Trial Balance as at 31 December 2012 £ Sales exclusive of VAT Purchases exclusive of VAT Inventory on 31.12.2011 Furniture account Accumulated depreciation on furniture Motor vehicles account Accumulated depreciation on vehicle Expenses exclusive of VAT Salaries and wages Entertainment with VAT Trade receivables and payables Cash and bank Tom' Kelaart's capital - 128,600 10,800 32,500 21,000 23,630 54,800 4,400 11,640 430 41 180,200 14,750 4,000 8,850 80,000 287,800 287,800