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(10 marks) b. Adam owns a small business selling home electronics. Below is the company's unadjusted trial balance dated December 31, 2018. Trial Balance Account Name Debits Credits 394,400 2,400 59,200 257,600 880 160,000 20,000 32,000 Sales Sales Return Inventory 15 January Purchases Purchases return Non-Current assets at cost: Freehold property Equipment Motor Vehicles Accumulated depreciation on: Equipment Motor vehicles Salaries and wages Insurance Advertising expenses Motor expenses Loan interest Receivables Allowances for receivables Payables Cash at bank Bank loan Capital 2,000 6,400 7,600 960 2720 800 3,600 52,000 2,400 45,600 8,800 36,000 120,000 607,680 607,680 Additional information is provided for use in preparing the company's adjustments: 1. Closing inventory is valued at $56,000. 2. Equipment has an estimated useful life of ten years, with no residual value, and is depreciated using the straight-line method. 3. Motor vehicles are depreciated at 20 percent per annum using the reducing balance method. It has no residual value. 4. Accrued wages at the end of 2018 amount to $ 1200. 5. Insurance expense includes $320 of prepaid insurance. 6. Irrecoverable receivables of $2,400 need to be written off. 7. Adam decides to increase allowances for receivables to $4,000. 8. Adam has taken goods worth $1520 for his own use. Required: 1. Prepare Adam's income statement for the year ended December 31st, 2018. 2. Prepare Adam's balance sheet as at December 31st , 2018

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