Cheng is a sole trader. The following balances were extracted from his books on 30 September 2015. $ Revenue 315000 Purchases 165000 Returns outwards 2600 Wages and salaries 34800 Motor vehicle expenses 17200 Commission receivable 12500 Rent 15000 Provision for doubtful debts 1000 6% Bank loan (repayable 30 June 2019) 30000 Bank interest paid 1200 Inventory at 1 October 2014 36800 Heat and light 6500 Other operating expenses 7100 Cash and bank 19500 debit Trade payables 25000 Trade receivables 34000 Capital 15000 Drawings 18000 Motor vehicles (cost) 50000 Fixtures and fittings (cost) 24000 Provision for depreciation: Motor vehicles 10000 Fixtures and fittings 18000 Additional information at 30 September 2015 1 On 26 September 2015 goods had been purchased for $3000 cash. The transaction had not been recorded in the books. 2 Inventory was valued at $29 980. 3 The rent included a payment of $6000 for the six months ending 31 December 2015. 4 Other operating expenses accrued $1100. 5 Commission receivable of $2500 was outstanding. 6 Depreciation is to be charged on all non-current assets owned at the end of the year as follows: (i) Motor vehicles at the rate of 20% per annum using the diminishing (reducing) balance method (ii) Fixtures and fittings at the rate of 15% per annum, using the straight-line method. 7 Trade receivables of $2000 are irrecoverable. The provision for doubtful debts is to be maintained at 5% on the remaining trade receivables.

1. (a)Prepare the income statement for the year ended 30 September 2015.[22]
2. (b)Prepare the statement of financial position at 30 September 2015.[18]