Prepare the profit and loss account for top to toe

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Reference no: EM131201632

Prepare the profit and loss account for Top-to-Toe for the year ending 31 December 1988

Using the Top-to-Toe information in Question, prepare a balance sheet for the business as at 31 December 1998.

Question

Naomi Cameron has opened a health and beauty salon called Top-to-Toe, offering a range of slimming and beauty treatments. She is renting the property and sublets one of the rooms 2 days per week to an aromatherapist. The trial balance for the first year of business is as follows:

Top-to-Toe Trial balance as at 31 December 1998
	£	£
Sales		72,100
Purchases	11,160
Wages	12,000
Rent	18,000
Insurance	7,400
Electricity	1,840
Advertising	3,860
Telephone	1,450
Administration expenses	1,250
Rental income		1,500
Equipment	15,000
Debtors	1,200
Creditors		1,620
Bank	1,060
Capital		15,000
Drawings during year	16,000
	90,220	90,220

Notes.
•The stock at the end of the year is valued at £790

•Advertising paid in advance is £260

•It has been decided to depreciate the equipment by 25%

•The following accruals should be allowed:

administration expenses £160;
telephone £290:
electricity £540

•A provision for doubtful debts of 20% of debtors should be made.

Reference no: EM131201632

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