The following list of balances has been extracted from the financial records of Pemba Plc as at 31st December 2018:

Details	Amount (K)
Sales	11,178,000
Purchases	7,625,000
Inventory at 1 January 2018	850,000
Administrative salaries	620,000
Selling and distribution wages	400,000
Rent, rates and insurance	219,000
Telephone expenses	210,000
Advertising	175,000
Debenture interest paid	35,000
Heat and light	213,000
Bank overdraft interest	35,000
Audit fees	91,000
Ordinary shares of 50 ngwee each	1,200,000
Retained profits at 1 January 2018	680,000
Bank overdraft	430,000
10% Debentures 2030	700,000
Property at cost	1,900,000
Depreciation of property at 1 January 2018	250,000
Machinery at cost	1,500,000
Depreciation of machinery at 1 January 2018	450,000
Motor vehicles at cost	480,000
Depreciation of motor vehicles at 1 January 2018	80,000
Trade receivables	960,000
Trade payables	345,000

Additional information: (i) The closing inventory at 31 December 2018 was valued at K935,000. 5 (ii) Depreciation is to be charged on the following bases:

Property	2% of cost
Machinery Motor vehicles	10% of cost 20% of reducing balance

(iii) Electricity used in the year but not paid for was K3,000. (iv) Debenture interest unpaid must be provided for, as well as a tax liability of K500,000. (v) The annual insurance policy of K90,000 was paid in full to 30 June 2019. Required: (a) Prepare the income statement of Pemba Plc for the year ended 31st December 2018. [10 Marks] (b) Prepare the statement of financial position of Pemba Plc at 31st December 2018. [10 Marks]