Karma Ltd is a trading company involves in buying and selling business. Below trial balance is provided for the year ended 31 December 2020 and you are expected to prepare the basic financial statements.

Description	Debits	Credits
Administration expenses	1,250
Bank	500
8% Debenture		2,000
Trade Receivables	1,500
Investments	2,500
Goodwill	4,000
Distribution Cost	250
Investment Income		375
Equipment at Cost	500
Equipment Accumulated Depreciation		100
Ordinary Share Capital [1Mn Shares of $1]		1,000
Dividend Paid (31 December 2020)	100
Building at Cost	2,000
Building Accumulated Depreciation		400
Retained Earnings At 1 January 2020		2,425
Profit of Disposals		500
Purchases	6,000
Inventory 1st January 2020	1,200
Trade Payables		1,000
Revenue		12,000
	19,800	19,800

Notes to the accounts

1. Inventory at 31 December 2020 was valued at $750,000
2. The following expenses were still outstanding at 31 December 2020:
   1. Administration costs $50,000
3. The Distribution costs include a prepayment of $30,000 relating to the following year.
4. Depreciation is to be charged on:
   1. Buildings $200,000
   2. Equipment $50,000
5. Corporation tax charge on profits for the year is estimated to be $150,000.
6. Debenture interest is outstanding at the year-end.

Assessment task

You are required to produce an Income Statement, a Statement of Financial Position and a Statement of Changes in Equity as at 31 December 2020. Relevant working notes should be submitted