Gotchi (Pty) Ltd (Gotchi) purchases their inventory from international suppliers in order to provide the customers with the latest trends. The financial year end for Gotchi is 30 September.

Gotchis Financial Manager and Accountant recently resigned and you have been engaged to assist with the financial reporting for a few months while they plan for a more permanent solution. The bookkeeper gave you the following Trial Balance as at 30 September 2018 from their Accounting System (the system reports this in alphabetical order of the account descriptions).

Description	Debit (R)	Credit (R)
Accumulated depreciation: Delivery vehicles		1 086 500
Bank	1 560 000
Cost of sales	1 826 067
SARS: Current Tax Liability		45 732
Delivery income		652 816
Delivery vehicles: Cost	2 160 000
Electronics Sales Revenue		2 465 190
Equity: 01 October		1 388 871
General expenses	26 899
Interest expense	187 500
Long-term loan*		1 343 750
Overdraft		688 000
Rent expense	300 000
Salaries and wages	686 440
Tax expense	25 508
Trading Stock	874 445
Unexpired Insurance (Insurance asset)	24 000
Grand Total	7 670 859	7 670 859

*Comprise capital balance of R1 250 000 and accrued interest expense balance of R93 750 The bookkeeper noted that the following adjustments are yet to be accounted for in the trial balance: 1. The depreciation for 30 September 2018 month. Details from the asset register are as follows: Description of asset Cost (R) Depreciation rate Delivery van 660,000 20% p.a. on cost Delivery truck 1,500,000 10% p.a. on cost Total 2,160,000 2. The company decided to take out an insurance policy on 1 September 2018 and paid an annual premium of R24 000 on the same day. The policy will provide cover from 1 September 2018 to 31 October 2019.

3. The company declared a dividend of R200 000 to the shareholders on 29 September 2018 but was only able to pay R150 000 of the dividend. The balance will be paid on 31 October 2018. 4. These three transactions (1, 2 and 3) decreased the tax expense by R7 140.

The bookkeeper gave you the following Statement of Financial Position for the previous financial year.

Gotchi (Pty) Ltd Statement of Financial Position as at 30 September 2017	Amount (R)
Non-current assets	732 000
Delivery vehicles: Cost	2 160 000
Accumulated depreciation: Delivery vehicles	(1 428 000)
Current assets	2 307 371
Bank	1 581 070
Trading Stock	726 301
Total assets	3 039 371
Non-current liabilities
Long-term loan**	1 625 000
Current liabilities
SARS: Current tax liability	25 500
Equity	1 388 871
Total equity and liabilities	3 039 371

**Comprise capital balance of R1 250 000 and accrued interest expense balance of R375 000

REQUIRED

(a)	Prepare Gotchi's Income Statement for the year ended 30 September 2018.
		(b)	Prepare Gotchi's Statement of Financial Position as at 30 September 2018.
(c)	Calculate the income tax paid and interest paid that would be included in Gotchis Cash Flow Statement as at 30 September 2018.
(d)	Calculate the solvency ratios for Gotchi for the 2017 and 2018 financial years and comment on the solvency position of the company.
(e)	Calculate the liquidity ratios for Gotchi for the 2017 and 2018 financial years and comment on the liquidity position of the company.