Prepare an income statement, Cost Accounting

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Mrs. M. Botham is a sole trader, selling a variety of fashionable clothing materials. Her business year end is 31 December 2011.

You have been given the following trial balance for the year ended 31 December 2011 with all the relevant year-end adjustments already included.

(a) Prepare an income statement the business for the year ended 31 December 2011.

Mrs Botham trading as Fashionable Clothing Material Trial balance as at 31 December 2011
	Dr £	Cr £
Accruals		1,000
Bank	2,000
Capital		11,750
Closing inventory	15,250	15,250
Depreciation charge	3,450
Discounts allowed	3,300
Drawings	17,750
Rent and rates Travelling expenses Insurance Telephone	11,250 8,210 2,750 650
Heating and lighting Plant and machinery at cost	1,850 19,500
Plant and machinery accumulated depreciation		8,390
Opening inventory	16,070
Prepayments	1,450
Purchases	114,580
Purchases returns Purchases ledger control account		440 12,330
Advertising	11,810
Sales		214,740
Sales returns Sales ledger control account	600 16,750
VAT		1,720
Wages	18,400
	265,620	265,620

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