Question 1 (Total: 40 marks) The balance sheet of Torrent and Co at the end of the first of trading is as follows: Balance sheet as at 31 December 2021 Non-current assets RM RM RM Motor vehicles at cost 120,000 Less Accumulated Depreciation (25,000) 95,000 Current assets Inventories 650,000 Trade receivables 196,000 Prepaid rates 3,000 Prepaid rent 50,000 Cash 7,500 906,500 Less Current liabilities Trade payables 220,000 Accrued wages 6,300 Accrued electricity 6,200 (232,500) 674,000 769,000 Equity Capital 500,000 Add profit for the year 269,000 769,000During 2022, the following transactions took place: 1 The owners withdrew capital in the form of cash of RM30,000. 2 Premises continued to be rented at an annual rental of RM200,000. During the year, rent of RM160,000 was paid to the owner of the premises. 3 Rates on the premises were paid during the year as follows: for the period 1 April 2022 to 31 March 2023 RM12,000. 4 A second delivery van was bought on 1 January 2022 for RM130,000 by a bank loan. There will be four equal instalments every 6 months. The first payment is due on 30 June and the second payment is due on 31 December. This van is expected to be used in the business for four years and then to be sold for RM30,000. 5 Wages totalling RM367,000 were paid during the year. At the end of the year, the business owed RM18,600 of wages for the last week of the year. 6 Electricity bills for the first three quarters of the year and RM6,200 for the last quarter of the previous year were paid totalling RM24,000. After 31 December 2022, but before the accounts had been finalised for the year, the bill for the last quarter arrived showing a charge of RM6,900. 7 Inventories totalling RM670,000 were bought on credit. 8 Inventories totalling RM80,000 were bought for cash. 9 Sales revenue on credit totalled RM1,790,000 (cost RM890,000). 10 Cash sales revenue totalled RM540,000 (cost RM250,000). 211 Receipts from trade receivables totalled RM1,578,000. 12 Payments to trade payables totalled RM689,000. 13 Van running expenses paid in cash totalled RM10,200. 14 The business uses the straight-line method for depreciating non-current assets. Required: a) Prepare an Income Statement for the year ending 31 December 2022; 20 marks and b) Prepare a Balance Sheet as at 31 December 2022 20 marks