Question Two The following list of balances is from the ledger of Mr. Carty as at February 28, 2018. Carriage Outwards $4,562 Drawings $18,440 Carriage Inwards $11,830 Discount Allowed $2,306 Discount Received $1,750 Purchases $135,680 Return Inwards $5,624 Rents, rates & insurance $25,973 Heating & Lighting $11,010 Postage, stationery & telephone $2,410 Debtor $ 24,500 Fixtures & Fittings- at cost $120,740 Provision for depreciation on fixtures & fittings- as at Feb. 28, 2018 $63,020 Depreciation $12,074 Advertising $5,980 Salaries & wages $38,521 Bad debt $2,008 Cash $534 Return Outwards $13,407 Provision for doubtful debt $512 Bank $4,440 Capital $83,887 Sales $259,870 Creditor $19,840 Stock as at March 1, 2017 $15,654 You are required to: 1. Prepare a trial balance from the information provided (5 marks) 2. Using the following additional information: a. Stock at the close of business was valued at $17,750 b. Insurances have been prepaid by $1,120 c. Heating and lighting is accrued by $1,360 d. The provision for doubtful debt is to be adjusted so that it is 3% of debtors e. Prepaid rates $5,435 i. Prepare an Income Statement for Mr. Carty for the year ended Feb. 28, 2018 (20 marks) ii. Prepare the statement of financial position as at Feb. 28, 2018 (20 marks) 3. Explain the importance of Income Statement and Statement of Financial position to Mr. Carty. Also, from the information gathered from the Income Statement and Statement of Financial position provide Mr. Carty with an analysis of his business performance. (5 marks)