Prepare the Income Statement and Balance Sheet for Island Traders, including adjustments for depreciation and interest on fixed deposit.

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: