Additional information

1. Sales for the year ending 31 December 2022 is expected to increase by 12%.

2. The existing gross profit percentage will be maintained in 2022

3. Operating expenses (excluding depreciation) are expected to increase by 10% in 2022.

4. 500 000 ordinary shares will be issued in 2022 at a value of R1 each.

5. The company will purchase a property costing R900 000 on 1 June 2022. A long-term loan will be taken out to fund the purchase. Monthly instalments of R7 668 will be payable on this loan. Interest of R43 300 will be paid on this loan for the period 1 June 2022 to 31 December 2022.

6. New plant and equipment costing R420 000 will be purchased for cash during April 2022.

7. Total depreciation for the year ending 31 December 2022 is expected to amount to R462 000. Depreciation for the year ended 31 December 2021 amounted to R420 000.

8. Percentage of sales must be used for the following items: Inventories Trade and other receivables Trade and other payables

9. 10% of the current long-term loan will be repaid during 2022. Interest paid on this loan will amount to R181 500.

10.Dividends of 10 cents per share will be declared in November 2022 and will be paid in March 2023.

11.An income tax rate of 28% will be applicable in 2022. Amounts owing to the South African Revenue Services for balances outstanding on 31 December 2021 will be paid in January 2022. Taxes due for 2022 will be paid in January 2023.

12. Any excess cash will be invested in long-term financial assets.

QUESTION 1 [18 MARKS]

1.1 Compile the Pro Forma Statement of Comprehensive Income for the year ended 31 December 2022. (6)

1.2 Compile the Pro Forma Statement of Financial Position as at 31 December 2022. (12)

\begin{tabular}{|l|c|} \hline Inventories & 1440000 \\ \hline Trade and other receivables & 1080000 \\ \hline Cash and cash equivalents & 360000 \\ \hline Total assets & 7080000 \\ \hline & \\ \hline EQUITY AND LIABILITIES & \\ \hline Shareholders' equity & 3771000 \\ \hline Ordinary share capital (1 500 000 shares) & 1500000 \\ \hline Retained earnings & 2271000 \\ \hline & \\ \hline Non-current liabilities & 22000000 \\ \hline Long term loan & \\ \hline & \\ \hline \end{tabular}