ABC LTD. was registered with an authorized capital of Rs. 6,000,000 divided into 1,000,000 ordinary shares of Rs. 10 each. The following balances appeared in the Balance Sheet of ABC LTD. as on June 30, 2017

: ASSETS Rs. EQUITY Rs. Cash 661,000 Accounts payable 75,000 Accounts Receivable 655,000 Accumulated dep. (Plants) 230,000 Merchandise July 01, 2016 25,000 Outstanding Utilities 8,000 Plants and Equipment 1,600,000 20% Bonds payable 500,000 Purchases 480,000 Paid up capital 1,000,000 Transportation in 20,000 Sales Revenue 1,550,000 Salaries expenses 80,000 Retain Earnings 59,000 Unexpired insurance 8,000 Mortgage Payable 200,000 Rent expenses 35,000 Auditors fee expenses 30,000 Directors fee expenses 28,000 Total 3,022,000 Total 3,022,000 Data for adjustments on June 30, 2017 i. Outstanding advertising amounted to Rs. 4,000 ii. Insurance expired Rs. 1,000. iii. Machinery be depreciated by 25% for each year iv. Inventory at June 30, 2010 was valued at Rs. 80,000 v. Salaries unexpired Rs. 5,000 vi. Rent is due Rs. 10,000 vii. Provide 40% for income tax. viii. Cash dividend was declared 15% on paid up capital Required a. Income statement for the year ended June 30, 2017. b. Statement of retain earnings and balance sheet for the year ended June 30, 2017.