Question1:

The following are account balances of Gadgets Com Pty, Ltd., a company selling gadgets, at the end of financial year 2020

Accounts	2020 ($000)
Cash at bank	168
Inventory	600
Accounts receivable	450
Land	1,516
Buildings &Equipment	2,169
Accumulated depreciation	350
Accounts payable	900
Notes payable (due in 12 months)	250
Bank loan	2,000
Share capital	866
Retained earnings (Ending Balance)	537
Sales	5,500
Cost of goods sold	2,100
Finance costs	250
Sales salaries expense	425
Sales utilities expenses	35
Office salaries expense	825
Office utilities expenses	125
Depreciation expense	100
Income Tax	492

Required:

1. Prepare a classified Income Statement (8 marks)
2. Prepare a classified Balance Sheet (10 marks)
3. Incorporating the additional information below, calculate the Gross Profit Margin (GPM) and the Profit Margin (PM) ratios for GadgetsCom and provide your comment on the companys profitability and efficiency. (6 marks)

Additional Information

The manager was pleased with the increased sales revenue in the current year. Last years ratios are GPM 55% and PM 23%. The following are ratio formula used by the company:

Ratio	Method of calculation
Gross Profit Margin	Gross Profit x 100 = x% Sales revenue
Profit Margin	Profit After Tax x 100 = x% Sales revenue