QUESTION $1$

$(25$ Marks$)$

$1\mathrm{.}1$

REQUIRED

Use the information provided below to prepare the following:

$1\mathrm{.}1\mathrm{.}1$

Pro Forma Statement of Comprehensive Income for the year ended $31$ December $2018.$

$(6$ marks$)$

$1\mathrm{.}1\mathrm{.}2$

Pro Forma Statement of Financial Position as at $31$ December $2018.$

$(14$ marks$)$

INFORMATION

MANOR LTD

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED $31$ DECEMBER $2017$

R

Sales

$5000000$

Cost of sales

$(3500000)$

Gross profit

$1500000$

Operating expenses

$(700000)$

Profit before tax

$800000$

Income tax $(30\%$ of pre$-$tax profit$)$

$(240000)$

Profit after tax

$560000$

MANOR LTD

STATEMENT OF FINANCIAL POSITION AS AT $31$ DECEMBER $2017$

R

ASSETS

Non$-$current assets

$2000000$

Fixed$/$Tangible assets

$2000000$

Current assets

$1800000$

Inventories

Trade and other receivables

Cash and cash equivalents

$600000$

$800000$

$400000$

Total assets

$3800000$

ds $2$

EQUITY AND LIABILITIES

R

Shareholders$$ equity

$1800000$

Ordinary share capital $(400000$ shares$)$

Retained earnings

$800000$

$1000000$

Non$-$current liabilities

$1200000$

Long$-$term loan

$1200000$

Current liabilities

$800000$

Trade and other payables

Income tax payable

$780000$

$20000$

Total equity and liabilities

$3800000$

Additional information

$1)$

Sales for the year ended $31$ December $2018$ are expected to total R$5500000.$

$2)$

Cost of sales and operating expenses are expected to represent the same percentage of sales for the year ended $31$ December $2018$ as for the previous financial year.

$3)$

An additional $100000$ shares are expected to be issued on $01$ June $2018$ at R$3\mathrm{.}50$ each.

$4)$

A final dividend of $50$ cents per share is expected to be recommended on $31$ December $2018$ and the dividends are payable during $2019.$

$5)$

Cash and cash equivalents must be calculated $($balancing figure$).$

$6)$

Trade and other receivables represent approximately $20\%$ of the annual sales.

$7)$

The company$$s closing inventory will change directly with changes in sales for the financial year ended $31$ December $2018.$

$8)$

An old vehicle $($Cost price R$300000$; Accumulated depreciation R$200000)$ is expected to be sold for R$120000$ on $31$ December $2018$ and a new vehicle costing R$400000$ will be purchased on the same date to replace it$.$ Depreciation for the year ended $31$ December $2018$ is expected to total R$250000($and is included in the operating expenses amount$).$

$9)$

Trade and other payables on $31$ December $2017$ consisted of trade creditors only. Trade creditors will change directly in response to changes in sales for the financial year ended $31$ December $2018.$

$10)$

Income tax payable on $31$ December $2018$ will equal to $10\%$ of the tax liability on the Pro Forma Statement of Comprehensive Income.

$11)$

R$200000$ of the long$-$term loan will be repaid during the financial year ended $31$ December $2018.$