Island Traders: Prepare the Income Statement and Balance Sheet using the provided adjustments for depreciation and interest.

Here is the Income Statement and Balance Sheet for Island Traders.

Step 1: Calculate Adjustments

• Depreciation on Equipment:

  $$\text{Depreciation Expense} = \text{Equipment Cost} \times \text{Rate}$$ $$\text{Depreciation Expense} = R95\,600 \times 20\% = R19\,120$$ $$\text{Accumulated Depreciation (new)} = \text{Existing Accumulated Depreciation} + \text{Current Year Depreciation}$$ $$\text{Accumulated Depreciation (new)} = R20\,600 + R19\,120 = R39\,720$$

• Interest on Fixed Deposit: