QUESTION THREE [30] The following extracts of the financial statements of Rockgrip Industries were presented to you: Statement of Comprehensive Income (Income statement) for the year ended 30 June: 2020 2019 Sales 8 260 000 6 060 000 Cost of sales (2 020 000) (1 520 000) Gross profit 6 240 000 4 540 000 Operating expenses (4 860 000) (3 960 000) Operating profit 1 380 000 580 000 Interest expense ( 180 000) ( 80 000) Profit before tax 1 200 000 500 000 Tax ( 320 000)_ ( 120 000) Profit after tax 880 000 380 000 Statement of Financial Position (Balance sheet) as at 30 June: 2020 2019 Assets Non-current assets 4 720 000 4 440 000 Office machinery 3 600 000 3 200 000 Motor vehicles 1 120 000 1 240 000 Current assets 1 420 000 1 380 000 Inventories 600 000 480 000 Debtors 500 000 520 000 Bank 320 000 380 000 6 140 000 5 820 000 Equity and Liabilities Owners equity 3 640 000 4 120 000 Ordinary share capital 2 000 000 3 000 000 Retained earnings 1 640 000 1 120 000 Non-current liabilities 1 800 000 800 000 10% Debentures - 2019 1 800 000 800 000 Current liabilities 700 000 900 000 Creditors 300 000 560 000 Receiver of revenue: Tax 120 000 60 000 Dividend payable 280 000 280 000 6 140 000 5 820 000 Additional information: 1. All sales and purchases are made on credit. 2. Depreciation included in operating expenses for the year ending 30 June 2020: Office machinery R200 000 and Motor vehicles R240 000. No asset was sold during this period. 3. Inventories for the year ending 30 June 2018 amounted to R460 000. 4. Dividend declared for the year ended 30 June 2020 amounted to R360 000. 5. The ordinary shares have a par value of R1.