The trial balance of Mumbai Traders at 31 December was as follows: Sh 000 Sh 000 Inventory at 1 January 600 Purchases 5,020 Cash at bank 922 Land at cost 6,200 Insurance 864 Light and heat 1,226 Printing and stationery 731 Professional fees 860 Allowance for doubtful debts 10 Accounts receivable 812 Accounts payable 768 Wages 2,196 Bad debts expenses 21 Capital at 1 January 10,726 Sales 9,642 Office furniture 1,040 Accumulated depreciation on furniture 220 Rent 874 21,366 21,366 The following information is applicable. (a) Inventory on 31 December is Sh 850,000. (b) The cumulative allowance for doubtful debts is to be increased to Sh 15,000. (c) There is rent accrued of Sh 300,000. (d) Insurance of Sh 125,000 had been paid in advance. (e) Depreciation on office furniture is to be provided at 5 per cent on cost. You are required to: (a) Prepare an income statement for the year ended 31 December, (b) Prepare a statement of changes in capital for the year ended 31 December, and (c) Prepare a balance sheet as at 31 December