The following trial balance has been prepared from the books and records of a sole trader Manis Masam as of 31 December 2021. 

Manis Masam Enterprise Trial Balance as of 31 December 2021 Debit Credit RM RM Capital 10,000 Drawings 500 Delivery vehicles 12,500 Creditors 7,000 Debtors 9,000 Inventories (1 January 2020) 1,000 Office rent 3,600 Salesman salaries 2,800 General office salaries 1100 Interest 2,100 Bank 2,200 Return inwards 200 Return outwards 300 Provision for doubtful debts 400 Purchases 12,000 Sales revenue 40,000 Office equipment 11,000 Discounts received 200 Advertising 1,800 Discount allowed 100 Bad debts 100 Accumulated depreciation on delivery vehicles 1000 Accumulated depreciation on office equipment 1100 60,000 60,000.

Additional information: 

1. An additional bad debt of RM800 is to be written off. 

2. The provision for doubtful debts is to be at 10% of debtors' balance. 

3. Salesman salaries are accrued by RM300. 

4. Office rental per month is RM200.

 5. Bank interest owing RM100. 

6. The value of inventories on 31 December 2021 is RM1,500. 

7. Depreciation for the noncurrent assets is to be provided as below: 

• Delivery vehicles at 20% per annum based on reducing balance method 

• Office equipment at 10% per annum using the straight-line method. 

Required: 

i. Income Statement for the year ended 31 December 2021.  

ii. Statement of Financial Position as of 31 December 2021. 

iii. The owner is rather concerned about the increase in bad debts in the business, discuss any two reasons where a debt may be irrecoverable.