The trial balance of Mumbai Traders at 31 December was as follows: 

Sh’ 000 Sh’ 000 

Inventory at 1 January 600 

Purchases 5,020 

Cash at bank 922 

Land at cost 6,200 

Insurance 864 

Light and heat 1,226 

Printing and stationery 731 

Professional fees 860 

Allowance for doubtful debts 10 

Accounts receivable 812 

Accounts payable 768 

Wages 2,196 

Bad debts expense 21 

Capital at 1 January 10,726 

Sales 9,642 

Office furniture 1,040 

Accumulated depreciation on furniture 220 

Rent 874 21,366 21,366 

The following information is applicable. 

(a) Inventory on 31 December is Sh 850,000. 

(b) The cumulative allowance for doubtful debts is to be increased to Sh 15,000. 

(c) There is rent accrued of Sh 300,000. 

(d) Insurance of Sh 125,000 had been paid in advance. 

(e) Depreciation on office furniture is to be provided at 5 percent on cost. 

You are required to: 

(a) Prepare an income statement for the year ended 31 December, 

(b) Prepare a statement of changes in capital for the year ended 31 December,

(c) Prepare a balance sheet as of 31 December.