Question 3 The following is a trial balance at 31 October 2020 extracted from the ledger of BP Trading before making end-of-period adjustments: Dr (RM) Cr (RM) Capital 125,000 Bank loan 50,000 Accounts receivable/Accounts payable 96, 500 36, 200 Inventory at 1 November 2019 58, 500 Purchases and sales 246, 800 496, 500 Returns outwards/inwards 5, 200 2, 800 Provision for doubtful debts 700 Carriage inwards 8, 600 Carriage outwards 7, 200 Advertising 9, 500 Insurance 5, 400 Salaries and wages 55, 800 Electricity charges 2, 200 Telephone charges 3, 400 Motor vehicle at cost 85,000 Provision for depreciation - motor vehicle 22, 500 Furniture and equipment 58, 200 Provision for depreciation - furniture and equipment 10, 200 Sales commission 11, 200 Rent 22,000 Drawings 15,500 Import and customs duties 20,800 General expenses 6, 200 Cash at bank 23, 650 Bank loan interest 2, 250 743, 900 743, 900 Additional information: 1. Inventory at 31 October 2020 amounted to RM86, 200 2. Expenses owing on 31 October 2020: Audit fees RM5,000 Electricity 800 Telephone charges 1,600 Rent 2,000 Bank loan interest at 9% per annum 3. Insurance includes a premium RM3, 600 paid for a year to 30 April 2021. 4. Bad debts to be written off amounted to RM1, 500 and a provision for doubtful debts is to be made at 2% of the debtors. 5. Fixed assets are to be depreciated as follows: Motor vehicle 10% per annum on cost Furniture and equipment 20% per annum on cost You are required to do the following: (a) Prepare: (1) A statement of profit and loss for the year ending 31 October 2020. (ii)A statement of financial position at 31 October 2020. (16 marks) (14 marks) (b) In your opinion, is the financial performance of BP Trading for the year ended 31 October 2020 satisfactory? Discuss possible reasons for the figure obtained. What could have been done to improve the profitability of the business? Your combined answer to part (b) should be not more than 500 words