An extract from the year-end Trial Balance is shown. Goods costing £4,200 have been issued free for a sales promotion while goods costing £500 have been lost. The cost of inventory remaining unsold at 31.12.2010 was £39,580.

Required: 

Prepare the Statement of income for the year ended 31.12.2010.

(1) The inventory appearing in the Trial Balance is the Opening inventory, which would have been reported as Closing inventory at close of the previous year. 

(2) The information provided on closing inventory, lost goods, donated goods and goods taken by the proprietor is for the purpose of calculating the Cost of goods sold so that an accurate gross profit figure is reported.

Transcribed Image Text:

Trial Balance as at 31 December 2010 £ £ - 214,800 Sales Purchases Inventory 1.1.2010 Returns inwards Expenses 164,560 29,420 1,120 42,840