Question Two The following list of balances is from the ledger of G. Lea, a sole trader as at March 31, 2006. Purchases $224,000 Sales $419,700 Stock April 1, 2005 $51,600 Capital April 1, 2005 $72,000 Bank Overdraft $43,500 Cash $900 Carriage Inwards $4,600 Discount Allowed $14,400 Discount Received $9,300 Return Inwards $8,100 Return Outwards $5,700 Carriage Outwards $21,600 Rent and Insurance $17,400 Provision for doubtful debts $6,600 Office Equipment $20,000 Delivery Vans $27,000 Debtors $119,100 Creditors $61,200 Bad Debt Written off $400 Wages and Salaries $89,000 General Office Expenses $4,500 Provision for depreciation: Office Equipment $8,000 Delivery Vans $5,400 You are required to: 1. Prepare a trial balance from the information provided 2. Using the following additional information: a. Stock at March 31, 2006 was valued at $42,900 b. Wages and salaries accrued $2,100 and office expenses owing $200 at March 31, 2006 c. Rent Prepaid was $1,800 d. Provision for doubtful debts to be adjusted to $5,100 e. Provide for depreciation on the delivery vans at 20% per annum using the reducing balance method f. Provide for depreciation on the office equipment at 20% per annum using the straight line method i. Prepare an Income Statement for G. Lea for the year ended March 31, 2006

ii. Prepare the statement of financial position as at March 31, 2006 3. Explain the importance of Income Statement and Statement of Financial position to G. Lea. 4. From the information gathered in the Income Statement and Statement of Financial position, provide G. Lea with an analysis of his business performance.