QUESTION 1

1.2 Pro Forma Statement of Financial Position as at 31 December 2021. (16 marks)

INFORMATION Klicks Ltd Pro Forma Statement of Comprehensive Income for the year ended 31 December 2020 R Sales 16 000 000 Cost of sales (12 000 000) Gross profit 4 000 000 Expenses (2 000 000) Profit before tax 2 000 000 Company tax (30% of pre-tax profit) (600 000) Profit after tax 1 400 000 Pro Forma Statement of Financial Position as at 31 December 2020 R ASSETS Non-current assets 7 000 000 Fixed/Tangible assets 7 000 000 Current assets 6 000 000 Inventories 2 000 000 Accounts receivable 3 000 000 Cash 1 000 000 Total assets 13 000 000 EQUITY AND LIABILITIES Shareholders equity 6 450 000 Ordinary share capital 3 000 000Retained earnings 3 450 000 Non-current liabilities 4 000 000 Long-term loan 4 000 000 Current liabilities 2 550 000 Accounts payable 2 500 000 Income tax payable 50 000 Total equity and liabilities 13 000 000 Additional information 1) Sales for the year ended 31 December 2021 are forecast at R18 000 000. All the sales are expected to be on credit. 2) Dividends for 2021 are projected to be R700 000. The shareholders will only be paid during February 2022. 3) The cash balance on 31 December 2021 is expected to be 10% higher. 4) Accounts receivable will be based on a collection period of 40.15 days. 5) The companys closing inventory will change directly with changes in sales in 2021. 6) New machinery with a cost price of R3 840 000 will be purchased during January 2021. An old machine with a cost price of R200 000 and accumulated depreciation of R180 000 will be sold at carrying value when the new machinery is purchased. Total depreciation for the year ending 31 December 2021 is expected to amount to R640 000. 7) Accounts payable will change directly in response to changes in sales in 2021. 8) Income tax payable will equal 10% of the tax liability on the Pro Forma Statement of Comprehensive Income. 9) The issued share capital consists of 600 000 ordinary shares which represents 75% of the authorized share capital. All the unissued shares will be sold at R6 each during July 2021. 10) R1 000 000 of the long-term loan will be repaid during 2021. 11) The amount of external non-current funding required must be calculated (balancing figure).