BC a sole trader prepared the following trial balance from his accounts on 31 August 2022. Dr Cr $ $ Purchases 120000 Revenue 231500 Sales returns 3600 Inventory 1 September 2021 11 100 Capital 111900 Bank 4100 Non-current assets at cost Premises 98 000 Machinery 52000 Provision for depreciation of non-current assets Machinery 28400 Commission receivable 2200 Trade receivables 19200 Trade payables 7300 Discount allowed 600 Discount received 1400 Insurance 9600 Repairs 12400 Salaries 53900 Rates 6000 Carriage inwards 400 386800 386800 Additional information 1 The closing inventory at 31 August 2022 was valued at $12000. 2 Commission received of $800 was owing at 31 August 2022. 3 The balance shown for salaries covers the 11 months to 31 July 2022. Salaries for August 2022 are due and unpaid. There have been no salary increases over the previous 12 months and an equal amount is paid each month. 4 At 31 August 2022 rates were prepaid by $300. 5 The insurance included $700 covering a private insurance premium for BC. 6 The repairs included $4000 that related to a new attachment for machinery. 7 Machinery is to be depreciated at the rate of 20% per annum by the reducing balance method. A full year's depreciation is charged regardless of the date of any purchases. There were no disposals during the year. Premises are not depreciated.

1. (a)Prepare the income statement of BC for the year ended 31 August 2022[12]
2. (b)Calculate the working capital at 31 August 2022.[3]
3. (c)Advise BC on which option he should use. Justify your answer.[5]