Titbits Ltd extracted its year-end Trial Balance as shown and informs you that:

(a) Cost of goods remaining unsold at yearend cost £512,450. Goods costing £18,400 distributed free for sales promotion have not been accounted for.

(b) Besides debenture interest, salaries £11,540 and audit fees £6,000 remain unpaid.

(c) Buildings are depreciated at 2% per annum, using the straight-line method and assuming that one-third of the cost relates to land which is not depreciated. Vehicles are depreciated at 30% per annum on the reducing balance method.

(d) Rent is agreed at £2,000 per month.

(e) 30% of salaries and wages and 20% of telephone, postage, electricity relates to selling and distribution activity.

(f) Income tax on the year’s profit is estimated at £112,000.

Required:

Prepare for internal use the Statement of Income for the year ended 30 June 2011 and the Statement of financial position as at that date.

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Trial Balance as at 30 June 2011 £ Ordinary shares of 50p each Share premium account Land and buildings at cost Motor vehicles at cost Accumulated depreciation to 30.6.2010 Buildings Motor vehicles Sales Inventory - 30 June 2010 Rent Salaries and wages 8% Debentures Receivables and payables Advertising Interim dividend Telephone, postage, electricity Cash and bank balance Retained earnings b/f Debenture interest paid Purchases Sales commission - 840,000 180,000 428,620 30,000 124,560 562,400 24,400 12,000 18,440 12,550 - £ 300,000 30,000 135,450 81,000 4,428,200 400,000 494,640 348,780 16,000 3,936,500 32,600 6,218,070 6,218,070