Fatima is a sole trader. She prepares her financial statements to the end of March each year. At 31 March 2022, Fatima's ledger account balances included the following. $ Revenue 79400 Sales returns 3970 Purchases 36 500 Rent and rates 9000 Wages 10 100 General expenses 1287 Insurance 1800 Discount received 1095 Inventory at 1 April 2021 3000 Fixtures and equipment at cost 80000 Fixtures and equipment – provision for depreciation 39040 Trade receivables 6400 Trade payables 4995 Provision for doubtful debts 156 Cash drawings 8580 Capital at 1 April 2021 59000 The following information is also available. 1 Inventory at 31 March 2022 was $3120. 2 Fatima took goods for her own use from the business during the year ended 31 March 2022. These goods cost $1300. 3 Depreciation on fixtures and equipment is to be charged at 20% per annum using the reducing balance method. 4 Accrued wages at 31 March 2022 were $800. 5 Rent includes a payment of $1500 for the 3 months from 1 March 2022 to 31 May 2022. 6 An irrecoverable trade receivable of $200 is to be written off. 7 The provision for doubtful debts is to be set at 3% of trade receivables. REQUIRED

1. (a)Prepare Fatima's income statement for the year ended 31 March 2022. Fatima Income Statement for the year ended 31 March 2022 $ $[11]
2. (b)Prepare Fatima's capital account for the year ended 31 March 2022. Balance the account and bring down the balance on 1 April 2022. Fatima Capital account Date Details $ Date Details $[4]
3. (c)Fatima would like to expand the business. She thinks that additional finance of $20000 would be required for the equipment which she would need. Fatima's bank have offered to lend her $20000, to be repaid after four years at interest of 6% per annum. REQUIRED Advise Fatima whether or not to agree to the bank loan. Justify your answer.[5]