The trial balance of Mumbai Co. at 31 December was as follows:

The following information is applicable.

(a) Inventory on 31 December is €850,000.

(b) The cumulative allowance for doubtful debts is to be increased to €15,000.

(c) There is rent accrued of €300,000.

(d) Insurance of €125,100 had been paid in advance.

(e) Depreciation on office furniture is to be provided at 5 per cent on cost.
You are required to:
■ prepare an income statement for the year ended 31 December and a balance sheet as at that date.

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000 000 Inventory at 1 January 600 Purchases 5,020 Cash at bank 922 Premises at cost 6,200 Insurance 864 Light and heat 1,226 Printing and stationery 731 Professional fees 860 Allowance for doubtful debts 10 Accounts receivable 812 Accounts payable 768 Wages 2,196 Bad debts 21 Capital at 1 January 10,726 Sales 9,642 Office furniture 1,040 Accumulated depreciation on furniture 220 Rent 874 21,366 21,366