can you please help me do a IS/BS for below company...

James North, managing director and sole shareholder of Top Tier Manufacturing (Pty) Ltd has approached you for some financial help.

The successful growth of his small operation over the last few years has made him bullish and he is now keen to buy out his main competitor,

Thunder Production.

The proprietor of Thunder Production is considering retirement and James has heard that he would be interested in an outright sale

if the right deal came along.

As with many entrepreneurs, James does not have sufficient money to fund his dreams, so has built his existing company mainly on debt.

Having recently completed a finance course at WBS he has had his eyes opened to the benefits of gearing and is no longer worried

about debt levels in his business; in fact, he plans to fund the proposed acquisition by taking on even more debt.

He has had meetings with the owner of Thunder Production, and they have agreed on a purchase price.

As both are anxious to tie up the deal right away, North has come to you and urgently asked for your help.

He needs to get his current year-end accounts sorted out and to prepare projected set of financial statements for the newly merged company.

It is the beginning of October 2019 and you are given the following information for the year ended 30^thSeptember 2019: -

1. Retained Earnings from the 2018 balance sheet were R1,239,000.

2. Sales for the year ended 30^thSeptember 2019 amounted to R1,120,000, all of which were made on credit.

3. Ordinary Share Capital was R100,000, made up of the original 100,000 R1.00 shares issued to North at par value.

4. Marketing and Sales costs were 8% of sales for the year.

5. The NBV of fixed assets as at the 30^thof Sept 2019 was R1,074,000 and the depreciation charge for the year came to R100,580.

6. North's dividend policy was to pay out exactly half of all earnings after tax.

7. Top Tier Manufacturing had no overdraft at the end of Sept 2019 and North was unsure of the exact value of the cash on hand.

8. The corporate tax rate was 31%

9. The total cost of production for the year came to 55% of sales and stock on hand at year-end (of WIP and Finished Goods) amounted to R151,810.

10. L-T Debt outstanding at year-end was R1,126,000 and the interest charge for the year totalled R162,000.

11. General and Admin costs for the year were R54,600.

12. Debtors were taking an average of 67 days to settle their accounts.

13. As at 30^thSept 2019, suppliers were still owed a total of R91,000 for raw materials.

North hoped to affect the purchase of Thunder Productions immediately and merge the two entities with effect from the beginning

of the new financial year (ended 30^thSeptember 2020).

Having carefully analysed the external environment and Thunder Production's operation, North feels the following scenario is attainable: -

1. Sales are expected to double and will all still be on credit.

2. The economies of scale enjoyed by the merged entity would increase efficiency and bring down the cost of production to 50% of sales.

3. No new shares would be issued and North hoped to fund the acquisition by taking on an additional R1,000,000 of L-T Debt.

4. A total of R2,500,000 was to be paid for Thunder Productions. Of this, R2,000,000 was for the fixed assets and R500,000 for goodwill.

5. Depreciation to be charged for the year was R282,800.

6. By taking on Thunder Production's efficient credit controller, the debtors were now expected to take an average of 60 days to settle.

7. The stock turnover rate at year-end was exactly 6x.

8. General and Admin costs would grow in direct proportion to sales, while Sales & Marketing expenses would rise to 10% of sales value.

9. Creditors would increase to R110,400 by the end of Sept 2020.

10. Corporate tax rates and North's dividend policy were not expected to change for this year.

11. The increase in L-T Debt would push the interest bill for the year up to R297,600.

12. Cash on hand at the end of the year would amount to R85,200 and North hoped that if an overdraft was required, it would not be too big.

Questions

1. Income statement for 2019 and 2020
2. balance sheet for 2019 and 2020
3. Cashflow for year ended 30 September 2019
4. cashflow for year ended 30 September 2020
5. Calculate the ratios for both years