INFORMATION

Use the information provided to prepare the following for Midas Enterprises:

1.1 Budgeted Statement of Comprehensive Income for the year ended 31 December 2022. (8 marks)

1.2 Budgeted Statement of Financial Position as at 31 December 2022. (12 marks)

The following statement of comprehensive income for the financial year ended 31 December 2021 and the statement of financial position as at 31 December 2021 have been provided by Midas Enterprises:

Statement of comprehensive income for the year ended 31 December 2021

Sales 10 000 000

Cost of sales (5 750 000)

Gross profit 4 250 000

Variable selling and administrative expenses (1 500 000)

Fixed selling and administrative expenses (500 000)

Net profit 2 250 000

Statement of financial position as at 31 December 2021

ASSETS

Non-current assets 800 000

Property, plant and equipment 800 000

Current assets 3 400 000

Inventories 1 600 000

Accounts receivable 600 000

Cash 1 200 000

TOTAL 4 200 000

EQUITY AND LIABILITIES

Equity 3 760 000

Current liabilities 440 000

Accounts payable 440 000

TOTAL 4 200 000

Additional information:

1. The sales budget for 2022 is as follows:

First quarter R2 625 000

Second quarter R2 750 000

Third quarter R2 875 000

Fourth quarter R2 750 000

2. 90% of the sales is collected in the quarter of the sale and 10% in the quarter following the sale.

3. The gross margin ratio for 2022 is expected to be the same as for 2021.

4. Inventory is purchased in the quarter of the expected sale. Eighty (80%) of inventory purchases is paid for in the quarter of purchase and twenty percent (20%) is paid for in the quarter following the purchase.

5. The inventories balance at the end of each quarter is expected to be the same as the end of the last quarter of 2021 viz. R1 600 000.

6. Variable selling and administrative expenses will vary in the same ratio to sales as for 2021.

7. Fixed selling and administrative expenses will be the same as for 2021 and will include annual depreciation of R160 000 on property, plant and equipment.

8. On 31 December 2022 an old vehicle with a cost price of R180 000 and accumulated depreciation of R150 000 will be traded-in for new vehicle. The new vehicle will cost R400 000 and the trade-in value of the old vehicle is expected to be R50 000.

9. The proprietors drawings for 2022 are estimated to be R1 527 000.

10. The cash balance must be calculated (balancing figure).

Question 1

QUESTION 1

(20 MARKS)

1.1

MIDAS ENTERPRISES
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022
	Workings (if any)	R
Sales
Cost of sales
Gross profit
Variable selling and administrative expenses
Fixed selling and administrative expenses
Net profit

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022
	Workings (if any)	R
ASSETS
Non-current assets
Property, plant and equipment
Current assets
Inventories
Accounts receivable
Cash
EQUITY AND LIABILITIES
Equity
Current liabilities
Accounts payable