This question also relates to extended trial balances. From the following trial balance of John Brown, store owner, prepare an income statement for the year ending 31 December 2013, and a statement of financial position as at that date, taking into consideration the adjustments shown below:

(i) Closing inventory at 31 December 2013 £120,000. (ii) Accrued wages £5,000. (iii) Rates prepaid £500. (iv) The allowance for doubtful debts to be increased to 10 per cent of accounts receivable. (v) Telephone account outstanding £220. (vi) Depreciate shop fittings at 10 per cent per annum, and van at 20 per cent per annum, on cost.

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Trial Balance as at 31 December 2013 Sales Purchases Sales returns Purchases returns Opening inventory at 1 January 2013 Allowance for doubtful debts Wages and salaries Rates Telephone Shop fittings at cost Van at cost Accounts receivable and accounts payable Bad debts Capital Bank balance Drawings Dr 350,000 5,000 100,000 30,000 6,000 1,000 40,000 30,000 9,800 200 3,000 18,000 593,000 Cr 400,000 6,200 800 7,000 179,000 593,000