QUESTION 2 (15 Marks) REQUIRED Use the following information to prepare the Pro Forma Statement of Financial Position of Govan Limited as at 31 December 2021 INFORMATION Sales for 2020 amounted to R4 000 000. Seventy percent (70%) of the sales were for cash and the balance on credit. The cash sales for 2021 are expected to increase by 30% whilst the credit sales are expected to increase by 40%. Total purchases (all credit) are expected to amount to R3 000 000 Trade and other receivables must be calculated using the percentage-of-sales method. Accounts payable is based on a payment period of 73 days. The company maintains a fixed inventory level of R2 000 000 at the end of each month. Govan Limited expects to show a net decrease in cash of R200 000 during 2021. Equipment with a cost price of R800 000 and accumulated depreciation of R600 000 is expected to be sold at the end of 2021 for R300 000. Additional property with a cost of R4 000 000 will be purchased during 2021. Total depreciation for 2021 is estimated at R800 000. 200 000 ordinary shares are expected to be sold at R3 each during January 2021. The company predicts a 20% profit margin (net profit margin). Dividends of R500 000 are expected to be paid by the company during 2021. R1 000 000 will be paid to Jip Bank during 2021. This includes R300 000 for interest on loan. The amount of external non-current funding required must be calculated. GOVAN LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 R 6 000 000 6 000 000 3 840 000 2 000 000 1 680 000 160 000 9 840 000 ASSETS Non-current assets Fixed/Tangible assets Current assets Inventories Trade and other receivables Cash and cash equivalents Total assets EQUITY AND LIABILITIES Shareholders' equity Ordinary share capital Retained earnings Non-current liabilities Long-term loan (Jip Bank) Current liabilities Trade and other payables Total equity and liabilities 4680 000 3300 000 1 380 000 4 000 000 4 000 000 1 160 000 1 160 000 9 840 000 QUESTION 2 (15 Marks) REQUIRED Use the following information to prepare the Pro Forma Statement of Financial Position of Govan Limited as at 31 December 2021 INFORMATION Sales for 2020 amounted to R4 000 000. Seventy percent (70%) of the sales were for cash and the balance on credit. The cash sales for 2021 are expected to increase by 30% whilst the credit sales are expected to increase by 40%. Total purchases (all credit) are expected to amount to R3 000 000 Trade and other receivables must be calculated using the percentage-of-sales method. Accounts payable is based on a payment period of 73 days. The company maintains a fixed inventory level of R2 000 000 at the end of each month. Govan Limited expects to show a net decrease in cash of R200 000 during 2021. Equipment with a cost price of R800 000 and accumulated depreciation of R600 000 is expected to be sold at the end of 2021 for R300 000. Additional property with a cost of R4 000 000 will be purchased during 2021. Total depreciation for 2021 is estimated at R800 000. 200 000 ordinary shares are expected to be sold at R3 each during January 2021. The company predicts a 20% profit margin (net profit margin). Dividends of R500 000 are expected to be paid by the company during 2021. R1 000 000 will be paid to Jip Bank during 2021. This includes R300 000 for interest on loan. The amount of external non-current funding required must be calculated. GOVAN LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 R 6 000 000 6 000 000 3 840 000 2 000 000 1 680 000 160 000 9 840 000 ASSETS Non-current assets Fixed/Tangible assets Current assets Inventories Trade and other receivables Cash and cash equivalents Total assets EQUITY AND LIABILITIES Shareholders' equity Ordinary share capital Retained earnings Non-current liabilities Long-term loan (Jip Bank) Current liabilities Trade and other payables Total equity and liabilities 4680 000 3300 000 1 380 000 4 000 000 4 000 000 1 160 000 1 160 000 9 840 000