The following trial balance was extracted as at 31 December 2020

Ordinary share capital 50,000

8% preference share capital 8,000

Plant and machinery at cost 34,000

Motor vehicle at cost 16,000

Computer hardware at cost 5,000

10% debentures 9,000

Inventories (1 January 2020) 25,200

Generals expenses 11,020

Purchases 164,764

Sales 233,384

Investment income 1,125

Sales Returns 24,210

Insurance premiums 750

Directors fees 7,000

Retained earnings (1 Jan. 2020). 8,470

Additional information:

1. Inventories as at 31 December 2020 were valued at $28,247.
2. Non-current assets are depreciated at 10% on cost.
3. Corporation tax rate is 30%.
4. The directors proposed to pay the dividend for the preference shares and 1% dividend for ordinary share capital.

Required:

Income statement for the year ended 31 December 2020