The following trial balance was extracted from the books of Pierre Jean, a sole trader, as at 31 December 2020:

Dr Cr

Premises at cost 250,000

Equipment at cost 45,000

Accumulated depreciation

- Premises 37,500

- Equipment 27,000

Sales 620,000

Purchases 345,000

Inventory as at 1/1/20 19,000

Interest received 2,050

Sales returns 2,500

Purchases returns 1,850

Wages and salaries 75,000

Bad debts written off 2,500

Loan interest 6,000

Miscellaneous expenses 22,500

Legal costs 9,000

Repairs & maintenance expenses 8,500

Rent & rates expense 13,500

Trade payables 29,500

Trade receivables 36,500

Bank 16,500

Drawings 15,000

Provision for bad debts 1,200

10% Bank loan (2027) 60,000

Capital 1/1/20 54,400

Total 850,000 850,000

The following additional information is available:

1. Closing inventory at 31/12/20 has been valued at 24,000

2. Legal costs prepaid at year end: 1,000

3. Wages & salaries expenses due at 31/12/20: 6,000

4. The provision for bad debts should be adjusted to 5% of the closing trade receivables

5. Depreciation of non-current assets is to be provided for as follows:

Premises: 5% per annum on cost (Straight Line)

Equipment: 20% per annum on cost (Straight Line)

Requirement:

(a) Prepare the Income Statement for Pierre Jean for the year ending 31 December 2020. (22 marks)

(b) Prepare a Statement of Financial Position as at 31 December 2020. (12 marks) Note: Clearly show your workings.