The financial year end of Mendip Limited is 30 June. At 30 June 2013, the following balances are available:

(i) The inventory at 30 June 2013 was: raw materials £22,000; finished goods £35,600. (ii) Salaries include £6,700 for directors’ fees. (iii) Depreciation is to be charged at 10% on cost of plant and machinery. Required: Prepare a manufacturing account and income statement for the year ending 30 June 2013.

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Freehold land and buildings at cost Plant and machinery at cost Accumulated depreciation on plant and machinery Purchase of raw materials Sales Factory rates Factory heat and light Accounts receivable Accounts payable Wages (including 15,700 for supervision) Direct factory expenses Selling expenses Office salaries and general expenses Bank General reserve Retained profits Inventory 1 July 2012: Raw materials Finished goods Dividends paid: Preference shares Ordinary shares 143,000 105,000 23,000 130,100 317,500 3,000 6,500 37,200 30,900 63,000 9,100 11,000 43,000 24,500 30,000 18,000 20,000 38,000 840 20,000