Singh Private Limited ended their last financial year on the 31 December 2017.

The following unadjusted trial balance was prepared for Singh Private Limited as at 31 December 2017:

Debit Credit

$ $

Long Term Investment 400,000

Delivery Vans:

Cost 160,000

Accumulated Depreciation as at 1 January

2017 64,000

Shop Fittings:

Cost 30,000

Accumulated Depreciation as at 1 January

2017 3,000

Inventory as at 1st January 2017 144,600

Trade Receivable 330,720

Provision for Doubtful Debts 1 Jan 2017 9,500

Bad Debts 10,000

Bank Overdraft 50,000

Trade Payable 120,190

Retained Profit as at 1 January 2017 135,040

Term Loan Due June 2020 40,000

Loan Interest 2,000

Rent Expense 120,000

Business Insurance expense 39,000

Telephone expense 12,000

Salary expense 85,000

Utilities expense 17,600

Advertising expense 10,500

Sales 1,768,390

Directors Remuneration 54,000

Purchases 997,700

Equity Dividends paid 20,000

Preference shares @$1.00 par 100,000

Share capital @ $1.00 par 50,000

Share Premium 43,000

General Reserves 50,000

Total 2,433,120 2,433,120

The following additional information was available:

1. The following should be noted regarding the bank balance.

I. Bank charges for $2,000 debited to the bank statement remain unrecorded at year-end.

II. A cheque for $2,500 for December salary was recorded in the books only in January 2018.

III. $20,000 received from a receivable account had been entered twice in the books.

2. The inventory was valued at $200,000 as at 31 December 2017 at sales value. Included in the closing stock were some damaged goods costing $5,000. These goods were subsequently sold in January 2018 for $4,000. Transportation cost of $500 was incurred. The company profit margin is 50%.

3. The business insurance accounts reflects insurance premium paid for twelve months starting from 1st March 2017.

4. A Bad Debt of $5,000 is to be written off and a provision of 1 % against the remaining trade receivable as at 31 December 2017 should be reflected at year-end.

5. The unpaid interest on the loan was paid only on 1 January 2018. Interest rate on the loan is 10% per annum.

6. A delivery van, the cost of which is $20,000 and accumulated depreciation of $8,000 was sold in December 2017, the sales proceeds of $20,000 being credited to the sales account. No other entries have been made for this disposal. No depreciation is charged in the year of sale.

7. Depreciation is to be provided at the following rates per annum using the method as indicated.

Shop fittings -10% using reducing balance Method.

Delivery Vans- On cost using the straight line method. The entire fleet of delivery vans was purchased on the 1st January 2015.

Assume zero residual values.

8. The utility expense for the month of December 2017 of $1,500 was unpaid as at 31 December 2017.

9. Taxation expense of $20,000 for the year ended 31 December 2017 remains unpaid at year-end.

10. Provision is to be made for unpaid audit fees of $10,000 for the year-ended 31 December 2017.

11. Directors remuneration of $4,000 remains unpaid at year-end.

12. During the year, 20,000 ordinary shares were issued at $1.50 per share, the sales proceeds of which were credited to the sales account.

13. $5,000 from the retained profit is to be transferred to the general reserves.

14. The Preference shares are redeemable on the 31 December 2021 and carry a fixed dividend rate of 5% per annum.

Required:

a) Prepare an Income Statement, a Statement of Changes in Equity for the year-ended 31 December 2017 and a Statement of Financial Position as at that date in a form suitable for presentation to the directors of the company.