Section B: All FIVE questions are compulsory. Questions 11 and 12 are worth 20 marks each. Questions 13, 14 and 15 are worth 15 marks each 11. Preparing financial statements You are a trainee accountant employed by the firm Husnain, Jubraj & Co. You have been asked to prepare accounts for a client, Sandbell Ltd. Sandbell have provided you with a Trial Balance, below, as at 28 February 20X8. Cash at bank Trade receivables 26,000 9,750 Prepaid expense 1,900 Land 9,300 Equipment - Cost 15,000 Equipment - Accumulated Depreciation 7,500 Sales revenue 10,000 Operating expense 2,300 1 ordinary share capital 30,000 Retained earnings 15,000 Inventory at 1 Mar, 20X7 3,500 Interest paid Purchases 250 1,500 Trade payables Borrowing -10% Loan notes 2,500 4,500 The owner of Sandbell advises you of the following: 1. Only the interest paid has been processed in the Trial Balance and an accrual should be made for the interest payable on the 10% loan notes which were in issue for the whole year. 2. Inventory as at 28 February 20X8 was 4,100 3. The equipment is three years old and is being depreciated on a straight-line basis to zero residual value over 6 years and is charged to Operating Expenses Required: a) Prepare the journal entries required to adjust for items 1-3 above. [6 marks] b) Prepare the Income Statement for the year to 28 February 20X8. [7 marks] c) Prepare the Statement of Financial Position as at 28 February 20X8. [7 marks] (Total of 20 Marks)