Thien has a retail business. The following balances were extracted from his books at the end of his financial year on 31 March 2012. $ Leasehold property – 25 years (cost) 50 000 Equipment (cost) 54 000 Provisions for depreciation: Leasehold property 10 000 Equipment 17 000 6% Bank loan repayable 31 December 2015 25 000 Bank 5 150 Dr Trade receivables 6 750 Trade payables 4 010 Provision for doubtful debts 700 Revenue 78 580 Purchases 18 240 Purchase returns 1 600 Inventory at 1 April 2011 4 690 Equipment repairs 850 Equipment running expenses 2 650 General expenses 8 400 Wages 15 300 Insurance 3 640 Power and water 2 300 Advertising 5 100 Discount allowed 1 650 Discount received 330 Capital at 1 April 2011 50 000 Drawings 8 500 Additional information at 31 March 2012 1 Inventory was valued at $3870. 2 Thien took stock valued at $450 for his own use. 3 Equipment running expenses, $750, were accrued and insurance, $1350, was prepaid. 4 The 6% bank loan was received on 1 December 2011. 5 An appropriate amount is to be written off the lease. 6 The purchase of additional equipment, $10 000, had been omitted from the books. Payment was $5000 by cheque with the remainder on credit. 7 Equipment is to be depreciated at the rate of 20% per annum using the diminishing (reducing) balance method. 8 Provision for doubtful debts is to be maintained at 8% of trade receivables. REQUIRED

1. (a)Prepare the income statement for the year ended 31 March 2012.[20]
2. (b)Prepare the balance sheet at 31 March 2012.[20]