QUESTION TWO The books of SONTRICE. Ltd. have been summarized as of 31st December 2022 in the following trial balance:

	Sh.000	Sh.000
Ordinary shares @ 30 each		400,000
10% Preference shares@10 each		190,000
Share premium		50,000
Retained profits as at 1 January 2022		100,000
8% debentures		100,000
Stock	200,000
Motor vehicles	1,200,000
Provision for depreciation - motor vehicles		60,000
Machinery	120,000
Provision for depreciation machinery		50,000
Land & Buildings at cost (Land 50,000,000)	620,000
Sales		1750,000
Purchases	350,000
Discounts	2,000	4,000
Returns	2,000	6,000
Carriage outward	2,000
Rates	200,000
Salaries	20,000
Carriage inwards	2,500
Creditors		202,500
Debtors	200,000
Provision for doubtful debts		6,000
Bank charges	5,000
Cash at bank	_ ______	___5,000
	2,923,500	2,923,500

Additional information:

1. Rates are accrued up to Sh.20,000,000.
2. Salaries are prepaid by sh. 980,000.
3. Write off 5% as bad debts.
4. Create a general provision for bad debts at the rate of 5%
5. Directors have declared a dividend of sh. 2 on ordinary shares.
6. Stock as at 31 December 2022 is valued at Sh.80,000,000
7. Depreciation is at the rate of 8% on reducing balance method for motor vehicles,10% on straight line method on Buildings and at the rate of 8% on reducing balance basis for machinery.
8. One Motor vehicle whose original cost was sh.800,000 was disposed at sh.620,000 on 6^th June. The accumulated depreciation on this vehicle is sh.290,000.
9. Land and Buildings were revalued to Sh.780,000,000 as of 16^th August 2021. (Land 190,000,000)
10. Transfer 4% of the profits to general reserves.
11. Tax is at the rate of 30%.
12. The fixed dividends on preference shares remains unpaid at the end of the year.
13. The interest on debentures remains unpaid at the end of the year.

Required:

(a) Income statement for the year ended 31 December 2022.

(b) Balance sheet as at 31 December 2022