Question 2(32) Dagmar Suppliers Ltd wants to do a scenario analysis to assess possible profitability for 2021. .

1.3.5. Profit available to ordinary shareholders 1.3.6. Total assets 1.3.7. Total shareholders' equity Show all calculations. (7) Question 2 [32] Dagmar Suppliers Ltd wants to do a scenario analysis to assess possible profitability for 2021. The company will consider three different sales scenarios. The pessimistic prediction of sales is R840 000, the most likely sales are R1 125 000 and the most optimistic prediction of sales is R1 350 000 Dagmar's statement of comprehensive income for 2020 is as follows: Dagmar Suppliers Ltd Statement of comprehensive income for the year ended 31 December 2020 Rand Revenue 950 000 Less: Cost of sales 446 500 Gross profit 503 500 Less: Operating expenses 326 250 Operating profit 281 250 Finance cost 45 000 Profit before tax 177 250 Less: Income tax 53 175 Profit for the year 124 075 Required: 2.1. Apply the percentage-of-sales method to the statement of comprehensive income for 2020 to develop the pessimistic and optimistic pro-forma statements of comprehensive income for 2021. Use the table format below to prepare your answer. Pessimistic Optimistic Items 2020 % of sales 2.2. (18) Explain why the percentage-of-sales method could result in an overstatement of profits for the pessimistic scenario and an understatement of profits for the optimistic scenario (14)