Sam Wong has been in business for many years. His accountant has extracted the following trial balance from his books of account as at 31 March 20x8:

	$	$
Bank	12,000
Carriage inwards	4,000
Carriage outwards	5,000
Capital		303,600
Cash	3,000
Discount allowed	30,000
Discount received		80,000
Drawings	60,000
Insurance	20,000
Office expenses	150,000
Bad debts	17,600
Office furniture at cost	50,000
Office furniture: Provision for depreciation at 1 April 20x7		20,000
Provision for bad and doubtful debts at 1 April 20x7		5,000
Purchases	550,000
Returns inwards	5,000
Returns outwards		8,000
Salaries	250,000
Sales		1,000,000
Stock at 1 April 20x7	100,000
Creditors		40,000
Debtors	200,000
	1,456,600	1,456,600

Notes: The following additional information is to be taken into account:

1. Stock at 31 March 20x8 was valued at $150,000.

2. The insurance included $5,000 which was related to the year ended 31 March 20x9.

3. Depreciation is charged on office furniture at 10% per annum of its original cost (it is assumed not to have any residual value).

4. $6,000 was further written off as bad debts for the year ended 31 March 20x8.

5. The provision for bad and doubtful debts is to be maintained at a level of 5% of outstanding trade debtors as at 31 March 20x8.

6. At 31 March 20x8, there was an amount accrued for salaries of $10,000 and office expenses $6,000.

Required:

Prepare Sam Wongs income statement for the year to 31 March 20x8 and

draw up a balance sheet as at that date.

And please give me adetailed explanation.