Nirwana Dealers has been in business for two years since 1 January 20.1. You are presented with their final trial balance at 31 December 20.2, together with additional information.

Trial balance is as follows:

Mortgage bond R75 000

Interest on mortgage bond R10 575

1. Prepare the income statement of Nirwana Dealers at year-end; and

2. The balance sheet at the same date, and make notes to balance sheet

NB: Show all your calculations.

The mortgage bond was registered on 1 January 20.1 when Niwarna Dealers purchased property, paying a 25% deposit and raising a mortgage bond for the remaining 75% (R90 000) of the value of the property. Repayments are made off the capital amount of the bond at a rate of R5 000 every six months, commencing 30 June 20.1. Make provision for the full years interest on the bond. The bond rate was increased by 2% to 20% p.a. on 30 September 20.2. Kindly assist with the above calculations. Please provide explanation as well. Thanking you in advance.