1 The trainee financial manager of Govan Limited took over the duties of the financial manager who was on leave. He requires assistance with the following matters for which he has limited knowledge: Determining the number of orders to place each year for the components required in production. Determining the value of issues to production and value of closing inventory using two different methods of inventory valuation. Preparing a Pro Forma Statement of Financial Position. QUESTION 1 1.1 REQUIRED Use the information given below to calculate the number of orders that should be placed during 2021 using the most advantageous quantity to order each time INFORMATION Govan Limited expects to purchase 40 000 components during 2021 with a purchase price of R20 per unit, an ordering cost of R2 per order and a carrying cost of 20 percent of the unit purchase price 1.2 REQUIRED Use the information given below to calculate the value of closing inventory and cost of sales using the 1.2.1 First-in-first-out method 1.2.2 Weighted average cost method. (Round off the weighted average cost per unit to the average cost per unit to the nearest cent INFORMATION Govan Limited had an opening inventory of 5 000 components at R16 each on 01 January 2020, the start of the financial year. During 2020 the following purchases of the components were made: 10000 units at R17 each on 25 February 9000 units at R18 each on 30 June 2000 units at R19 each on 15 November 1 000 components that were purchased on 30 June 2020 were returned to the supplier on 02 July 2020. During the year 22 000 components were issued to production. QUESTION 2 REQUIRED Use the following information to prepare the Pro Forma Statement of Financial Position of Govan Limited as at 31 December 2021 INFORMATION Sales for 2020 amounted to R4 000 000. Seventy percent (70%) of the sales were for cash and the balance on credit. The cash sales for 2021 are expected to increase by 30% whilst the credit sales are expected to increase by 40%. Total purchases (all credit) are expected to amount to R3 000 000. Trade and other receivables must be calculated using the percentage-of-sales method Accounts payable is based on a payment period of 73 days The company maintains a fixed inventory level of R2 000 000 at the end of each month Govan Limited expects to show a net decrease in cash of R200 000 during 2021. Equipment with a cost price of R800 000 and accumulated depreciation of R600 000 is expected to be sold at the end of 2021 for R300 000. Additional property with a cost of R4 000 000 will be purchased during 2021. Total depreciation for 2021 is estimated at R800 000. 200 000 ordinary shares are expected to be sold at R3 each during January 2021. The company predicts a 20% profit margin (net profit margin). Dividends of R500 000 are expected to be paid by the company during 2021. R1 000 000 will be paid to Jip Bank during 2021. This includes R300 000 for interest on loan. The amount of external non-current funding required must be calculated. GOVAN LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 ASSETS R Non-current assets 6 000 000 Fixed /Tangible assets 6 000 000 Current assets 3 840 000 Inventories 2 000 000 Trade and other receivables 1 680 000 Cash and cash equivalents 1 60000 Total assets 9 840 000 EQUITY AND LIABILITIES Shareholdersequity 4 680 000 Ordinary share capital 3 300 000 Retained earnings 1 380 000 Non-current liabilities 4 000 000 Long-term loan (Jip Bank) 4 000 000 Current liabilities 1 160 000 Trade and other payables 1 160 000 Total equity and liabilities 9 840 000