(a) The following trial balance was extracted from the books of Peter Mackie on 30 April 2024. From this, and the note below it, prepare his income statement for the year ending 30 April 2024, and a balance sheet as at that date.

(b) Peter has indicated that he thinks that the trade receivable amounts that have been written off will be paid eventually. He is also querying why adjustments are made in the financial statements for bad debts and depreciation. Write a short note to him, making appropriate references to accounting concepts, outlining why these adjustments are made.

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Sales Purchases Inventory 1 May 2023 Carriage outwards Carriage inwards Motor Vehicles: accumulated depreciation Fixtures and Fittings: accumulated depreciation Returns inwards Returns outwards Salaries and wages Motor expenses Rent Sundry expenses Motor vehicles Fixtures and fittings Trade receivables Trade payables Cash at bank Cash in hand Drawings Capital Dr 16,450 2,266 534 295 670 2,692 729 843 1,390 7,600 800 4,965 1,648 150 8,400 49,432 Cr 26,200 3,800 240 392 3,277 15,523 49,432