on the above information, answer the following questions:

(a) Prepare the income statement and retained earnings statement for the year ended 31 December 2021 (6 marks)

(b) Prepare the statement of financial position as at 31 December 2021. (6 marks)

(c) Shirley started her company on 1 January 2021. On that date, the company bought a machinery for company use, costing $ 140,000. The machine was expected to be used for 8 years before it would be replaced by a new model. As at 31 December 2021, Shirley decided that the machine be carried at its original cost of $140,000 on the statement of financial position, without provid- ing for depreciation.

Discuss whether Shirleys decision violated any accounting principle. (8 marks)

The following trial balance was extracted from the books of NH Limited as at 31 December 2021: Debit Credit Furniture and equipment, at cost $4,900,000 Inventory, 1 January 2021 152,400 Accumulated Depreciation - Furniture and Equipment, 1 Jan 2021 S643,000 Purchases 1,068,000 Bad debts 49,800 Sales returns 45,520 Selling and distribution expenses 597,060 Administrative expenses 106,000 Transportation-in 11,500 Wages and Salaries 545,000 Rent and rates 230,000 Dividend 85,500 Cash at bank 303,720 Accounts Receivable and Accounts Payable 1,225,000 708,000 Sales revenue 3,837,000 Issue of Share 1,000,000 Share Capital, Sl per share 2,000,000 5% Debentures 600,000 Share premium 166,700 General reserve 140,000 Retained earnings 224.800 $9,319,500 $9,319,500 Additional Information: (0) Inventory as at 31 December 2021 was $157,500. Some minor defects were found with a cost of $8,000. The estimated net realizable value of these products is $7900. (ii) Accounts Receivables includes an amount of S100,000 paid to an account payable as the deposit for future purchases of $500,000 of inventory (iii) At 31 December 2021, prepaid rent and salaries payable amounted to $2900 and $10,000 respectively. (iv) No entry was made for an interest of $5,000 receivable from an account receivable for the overdue balance. (v) Depreciation for furniture and equipment is at 20% of the book value. On 29 November 2021, 400,000 shares were issued at $2 per share. The company re- ceived subscription for 500,000. All subscription received was credited to the share issue account. Excess subscriptions will be refunded on 7 January 2022. (vii) The board of directors proposed a transfer of S150,000 to the general reserve. (viii) On 1 October 2021, 8600,000 5% debentures were issued, interests are paid semi- annually on 31 March and 30 September. (vi)