QUESTION 1 (60) (25) 1.1 Use the information given below to prepare the Pro Forma Statement of Comprehensive Income of Vista Enterprises for October, November and December 2019. (Note: Make provision for separate monetary columns for each month.) (19) INFORMATION VISTA ENTERPRISES PRO FORMA STATEMENT OF COMPREHENSIVE INCOME FOR THE MONTH ENDED 30 SEPTEMBER 2019 R Sales 2 000 000 Cost of sales (1 200 000) Gross profit 800 000 Other operating income 12 000 Rent income 12 000 Gross operating income 812 000 Operating expenses (516 000) Salaries 240 000 Stationery 16 000 Advertising 24 000

Bad debts 8 000 Insurance 20 000 Depreciation 16 000 Other operating expenses 192 000 Operating profit 296 000 Interest income (on fixed deposit) 800 Interest expense (2 400) Net profit 294 400 Additional information 1. Sales forecasts are as follows: October 20% less than the September sales November R2 400 000 December 25% more than the November sales. 2. The existing gross margin ratio will be maintained during the budget period. 3. Rent income increases by 12% with effect from 01 November each year. 4. Employees are entitled to an increase in salaries of 8% with effect from 01 November 2019. Employees will also receive a bonus equal to 80% of their November salary during December 2019. 5. Stationery purchases are expected to decline by 10% each month from November 2019. 6. Advertising will be maintained at the existing percentage on sales. 7. Bad debts are estimated at 5% of the credit sales of the previous month. Forty percent (40%) of all sales are on credit.

8. Depreciation is calculated at 20% on cost for all depreciable assets. A vehicle costing R480 000 will be purchased on 01 November 2019. Additional insurance of R38 400 per year will be required for the new vehicle. 9. The fixed deposit matures on 30 November 2019. 10. Monthly loan repayments of R20 000 will reduce the interest on loan by R200 each month. 11. Other operating expenses are expected to increase by 10% per month from November 2019. 1.2 REQUIRED Prepare a production budget for each month of the quarter ending 30 September 2019. (6) INFORMATION The information given below was supplied by Rolex Manufacturers.

The number of units expected to be sold from July to October 2019 are as follows:

July August September October 4 000 4 500 6 000 7 000 Finished units equal to 30% of the sales for the following month will be in inventory at the end of each month.