REQUIRED

Use the information provided below to answer the following questions:

$1\mathrm{.}1$ Explain why the following items are incorrectly disclosed in the Statement of Financial

Position. Also state what the correct disclosure should be$.$

$1\mathrm{.}1\mathrm{.}1$ Investment $(2$ marks$)$

$1\mathrm{.}1\mathrm{.}2$ Loan: UBS Bank $(15\%)(2$ marks$)$

$1\mathrm{.}2$ Calculate the following:

$1\mathrm{.}2\mathrm{.}1$ Investment income for the year ended $30$ September $2022(2$ marks$)$

$1\mathrm{.}2\mathrm{.}2$ Carrying value of the Fixed$/$Tangible assets as at $30$ September $2021(2$ marks$)$

$1\mathrm{.}2\mathrm{.}3$ The amount of net profit earned per share issued as at $30$ September $2022(3$ marks$)$

$1\mathrm{.}2\mathrm{.}4$ The amount of the profit that was retained by the company for the financial year ended

$30$ September $2022.(3$ marks$)$

$1\mathrm{.}3$ Explain the relative effects of accelerated depreciation methods and straight$-$line

depreciation methods on the operating profit over the useful life of the depreciable

assets. $(4$ marks$)$

$1\mathrm{.}4$ Identify TWO $(2)$ instances when the net realizable value of inventory would be lower

than the cost price of the inventory held. $(2$ marks$)$

INFORMATION

The following financial statements and additional information were provided by Jephson Limited:

Jephson Limited

Statement of Comprehensive Income for the year ended $30$ September $2022$

R

Sales R$18000000$

Cost of sales R$(11900000)$

Gross profit R$6100000$

Operating expenses R$(3300000)$

Operating profit R$2800000$

Investment income R$?$

Interest expense R$(360000)$

Profit before tax R$2480000$

Income tax R$(744000)$

Profit after tax R$1736000$

Jephson Limited

Statement of Financial Position as at $30$ September $2022$

R

ASSETS

Non$-$current assets R$3000000$

Fixed$/$Tangible assets R$2600000$

Investment R$400000$

Current assets R$10000000$

Inventories R$6400000$

Accounts receivable R$3000000$

Cash R$600000$

Total assets R$13000000$

EQUITY AND LIABILITIES

Equity R$5800000$

Ordinary share capital R$4000000$

Retained earnings R$1800000$

Non$-$current liabilities R$2800000$

Loan: UBS Bank $(15\%)$ R$2800000$

Current liabilities R$4400000$

Accounts payable R$3400000$

Dividends payable R$1000000$

Total equity and liabilities R$13000000$

Additional information

$1.$ Ninety percent $(90\%)$ of all purchases and sales of inventories are on credit.

$2.$ The authorised share capital consists of $3000000$ ordinary shares of which $2000000$ have been

issued.

$3.$ Loan repayments are expected to reduce the loan balance by R$400000$ in the next financial year.

$4.$ The investment was expected to be redeemed on $31$ August $2023.$

$5.$ Depreciation for the year ended $30$ September $2022$ amounted to R$400000.$ There was no purchase or

disposal of fixed assets during the financial year.

$6.$ The credit terms to debtors are $30$ days.

$7.$ Interim dividends paid out during the financial year amounted to R$302000.$