COMPANIES: FINANCIAL STATEMENTS AND

APPLICATION OF INTERPRETATION (28 marks)

There was a small fire in one of the offices at DBN Traders Ltd. and some of the documentation was destroyed. Fortunately the bookkeeper finished the analysis and interpretation to present at a financial meeting, but the information regarding the Statement of Comprehensive Income and the Statement of Financial Position was destroyed. You are provided with incomplete financial statements.

INSTRUCTION:

1 Use the information provided to complete the following on the answer sheet:

1.1 Statement of Comprehensive Income for the year ended 28 February 2021. (15)

1.2 Statement of Financial Position on 28 February 2021. (13)

INFORMATION:

1. Some amounts already appear on the financial statements.
2. Other additional information:
   1. The mark up percentage is 75% on cost price.
   2. Income tax calculated for the year is R48 780. That represent 30% of the profit before tax.
   3. Loans have not changed over the past two years interest of 8% per annum is paid.
   4. The debt equity ratio is 0,4:1.
   5. Trading stock is R63 000 according to stock taking.
   6. Acid test ratio is 2,6:1.
   7. Current ratio is 4,1:1.
   8. The net asset value per share is 500 cents per share.
   9. The return on shareholders equity is 21%.
   10. The total shareholders equity for the previous year (2020) amounted to R680 000.

[28]

ANSWER SHEET: COMPANIES: FINANCIAL STATEMENTS AND

APPLICATION OF INTERPRETATION (28 marks)

1.1 Statement of Comprehensive Income for the year ended 28 February 2021

Sales
Cost of sales
Gross profit		360 000
Other operating income		36 000
Gross operating income
Operating expenses		(226 600)
Operating profit
Interest income
Profit before interest expense
Interest expense
Profit before tax
Income tax
Net profit for the year

(15)

1.2 Statement of Financial Position on 28 February 2021

ASSETS
NON CURRENT ASSETS
Fixed assets at carrying value
Fixed deposit @ interest of 12% per annum		50 000
CURRENT ASSETS
TOTAL ASSETS
EQUITY AND LIABILITIES
SHAREHOLDERS EQUITY
Ordinary share capital		375 000
Retained income
NON CURRENT LIABILITIES		160 000
Loan
CURRENT LIABILITIES
TOTAL EQUITY AND LIABILITIES

(13)