74,450 Inventories as at 1/1/2020 98.030 101,200 Receivables and payables 17,800 Bank 7.800 Prepayments 31/12/20 14.200 Accruals 31/12/20 210.000 Term loan 546,500 879.000 Purchases and sales 21.400 11.650 Sales and purchases returns 18,400 19.640 Discounts allowed and received Carriage outwards 21,000 Insurance 33,700 Rent 55.000 Interest 15.520 Wages and salaries 74.200 ALL Allowances for receivables 1/1/20 4,900 Irrecoverable debts 7.210 Drawings 36.540 Capital 177.220 1,542,310 1,542,310 The following information, which has not been accounted for above, is also available: a. Inventory as at 31 December 2009 was valued at cost at K83,500. This figure includes inventory items that cost K 12,800. Post year end these inventory items were sold for K10,650 after incurring costs to sell of K970. act b. An item of fixtures & fittings was sold during the year for K16,980. The cost of the fixtures & fittings sold was K32,450 and depreciation of K19,460 had been charged as at 1/1/2020. c. Depreciation is to be provided for as follows: i. Fixtures & fittings - 4% straight line ii. Motor vehicles - 15% reducing balance The depreciation policy is to charge a full year's depreciation in the year of acquisition and none in the year of sale. d. A review of receivables balances as at the year-end identified K11,500 of receivables that should be written off as irrecoverable. e. The allowance for receivables is to be adjusted for 7% of the remaining receivable balances. Required: i. To prepare the Income Statement (Trading, Profit & Loss Account for the year ended 31 December 2020: (10 Marks) ii. To prepare the statement of financial position (Balance Sheet) as at that date. (10 Marks) QUESTION 1 The following trial balance was extracted from the books of Kandolo & sons, a sole trader, on 31 December 2020: Kandolo & sons Trial Balance for the year ended 31 December 2020 Dr Cr K K Fixtures & fittings at cost 420,000 Accumulated depreciation on fixtures & fittings 58.800 Motor vehicles 112,560 Accumulated depreciation on motor vehicles 47,900