please explain each step. thank you :))

QUESTION 1 - 50 Marks The following Trial Balance (TB) and additional information as at 31/12/2017 has been extracted from the accounting books and associated records of Hexagon pic: Notes / Additional Information (1) Closing inventories amounted to 1,200,000. However, these included goods costing C100,000 which turned out to be faulty. They were received from a supplier in December 2017, had been included in the purchases and payables figures shown in the TB above, but had not yet been paid for. The supplier agreed to take them back for full credit. (2) On 31 December 2017 equipment which had cost 6500,000 on 1 January 2015 was sold off for 150,000. No aspect of this disposal has been reflected in the accounts above. The depreciation rate on equipment for 2017 and previous years is 20% of cost. There were no additions to equipment during 2017 and this was the only disposal (3) No depreciation is charged on buildings, instead an annual revaluation is carried out at the end of each financial year. Due to surplus of vacant commercial properties in the area, the value of properties similar to Hexagon's is continuing to fall. Accordingly, the Board of Directors has decided to eliminate the buildings revaluation reserve. (4) The loan was taken out in 2016 on an interest only basis, with the first capital repayments due to be made on 1st July 2019 provided certain conditions were satisfied - particularly regarding prompt interest payments. However, Hexagon's bank, during routine monitoring of the account throughout the first half of 2017, became concerned about a lack of regularity in the quarterly interest payments that were due. On 1.07.2017 it be subject to an interest rate of 6% per annum from 01.07.2017; and - (Part B) the remaining 6700,000 becoming subject to an 8% p.a. interest rate (also from 01.07.2017) and the principal (capital) becoming due for repayment in 4 equal annual instalments commencing on 30.09.2018 (5) At the end of 31/12/2017: - Closing inventories c1,200,000 - Rent paid in advance 120,000 - Further bad debts amounting to $200,000 should be written off - The bad debt provision at the end of 2017 should be adjusted to 15% of closing debtors - - Provide for unpaid loan interest - Provide for corporation tax still outstanding - Provide for a final dividend of 5 cent per share Using information provided in the Trial Balance and notes/ additional information, you are required to prepare: a) An income Statement for the year ended 31/12/217 20 marks b) A balance Sheet as at 31/12/2017 22 marks c) A statement of Changes in Equity for the year ended 31/12/017 8 marks (TOTAL 50 Marks)