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Hussain owns a small business selling coffee makers to other businesses. On 31^st December 2019 he extracted the following trial balance.

Account Name	Debit $	Credit $
Sales Revenue		690,200
Sales returns	4,200
Opening inventory	103,600
Purchases	450,800
Purchase returns		1540
Freehold property	280,000
Equipment at cost	35,000
Accumulated depreciation on equipment		3,500
Motor vehicle	56,000
Accumulated depreciation on motor vehicle		11,200
Salaries and Wages	13,300
Insurance	1,680
Motor expenses	4,760
Advertising expenses	1,400
Loan interest	6,300
Receivables	91,000
Allowance for receivables		4,200
Payables		79,800
Cash at bank	15,400
Bank loan		63,000
Capital		210,000
Total	1,063,440	1,063,440

The following information is relevant.

Closing inventory was valued at $98,000.
Equipment is depreciated by 10% on Straight line basis.
Motor vehicles are depreciated by 20% on reducing balance basis.
Accrued wages at the end of 2019 amount to $2,100.
On 1 November 2019 Hussain paid $560 for insurance which is valid until 31 October 2020.
Irrecoverable receivables of $4,200 need to be written off.
Hussain decides to increase the allowance for receivable for five percent of the remaining outstanding receivables.
Hussain has taken goods worth $2,660 for his own use.

Required:

pur-new-sol

a.)	Income statement
	For the year ending 31st December 2019
			Amount $
	Sales revenue	690,200
	Less: Sales Return	4,200
	Net Sales		686,000
	Less: Cost of goods sold
	Opening Inventory	103,600
	Add: Purchases	450,800
	Less: Purchase Return	1,540
	Less: Drawings	2,660
	Less: Closing Inventory	98,000
	Cost of goods sold		452,200
	Gross Profit		233,800
	Less: Operating Expenses
	Salaries Expense		15,400	=13300+2100
	Insurance Expense		1,213	=1680-(560*10/12)
	Bad Debt Expense		4,340	=(91000-4200)*5%
	Deperciation Expense-Equipment		3,500	=35000*10%
	Deperciation Expense-Motor Vehicles		8,960	=(56000-11200)*20%
	Motor Expenses		4,760
	Advertising Expense		1,400
	Net Operating Income		194,227
	Less: Other expenses
	Loan Interest		6,300
	Net Income (loss)		187,927



b.)	Balance Sheet
	As at December 2019
			Amount $
	Assets
	Current Assets
	Cash at Bank		15,400
	Receivables ( 91,000 - 4,200 )	86,800
	Less: Allowance for Receivables	4,340	82,460
	Prepaid Insurance ( 560 x 10/12)		467
	Closing Inventory		98,000

	Non-Current Assets
	Equipment at Cost	35,000
	Less: Accumulated depreciation (3,500 + 3,500 )	7,000	28,000
	Motor Vehicle	56,000
	Less: Accumulated depreciation (11,200 + 8,960 )	20,160	35,840
	Freehold Property		280,000

	Total Assets		540,167
	Liabilities
	Salaries & wages Payable		2,100
	Bank Loan		63,000
	Payables		79,800

	Owner's Equity
	Capital (210000-2660+187927)		395,267

	Total Liabilities & Owner's Equity		540,167

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