REQUIRED Use the information provided below to prepare the: 1.1 Pro Forma Statement of Comprehensive Income for the year ended 31 December 2020.06 marks) 1.2 Pro Forma Statement of Financial Position as at 31 December 2020. (Note: except where otherwise stated, the percentage of sales method is not required) (14 marks) INFORMATION CONTINENTAL LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2019 6 240 000 (3 744 000) 2 496 000 (1 375 000) Sales Cost of sales Gross profit Operating expenses (including depreciation) Operating profit Interest on loans Profit before tax Income tax (28%) Profit after tax 1 121 000 (132 300) 988 700 (276 836) 711 864 CONTINENTAL LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019 ASSETS Non-current assets 3 200 000 Fixed Assets 3 200 000 Current assets 2 246 400 Inventories 748 800 Trade and other receivables 1248 000 Cash and cash equivalents 1249 600 Total assets 5 446 400 EQUITY AND LIABILITIES Shareholders' equity 3063 564 Ordinary share capital (600 000 shares) 600 000 Retained earnings 2 463 564 Non-current liabilities 1 170 000 Long term loan 1 170 000 Current liabilities 1 212 836 Trade and other payables 936 000 Income tax payable 276 836 Total equity and liabilities 5 446 400 Additional information 1. Sales for the year ending 31 December 2020 is expected to increase by 10%. 2. The existing gross profit percentage will be maintained in 2020. 3. Operating expenses are expected to increase by 8% in 2020. 4.500 000 ordinary shares will be issued in 2020 at a value of R1 each. 5. The company will purchase a property costing R800 000 on 1 April 2020. A long term loan will be taken out to fund the purchase. It is expected that interest will be paid at a rate of 12% on this loan. Monthly loan instalments of R14 000 will be paid on this loan beginning on 30 April 2020. 6. New plant and equipment costing R750 000 will be purchased during March 2020, 7. Total depreciation for the year ending 31 December 2020 is expected to amount to R395 000. 8. Percentage of sales must be used for the following items: a. Inventories b. Trade and other receivables c. Trade and other payables 9. 10% of the current long term loan will be repaid during 2020. Interest paid on this loan will amount to R140 400. 10. Dividends of R175 000 will be declared and paid by December 2020. 11. Income tax payable is 28% of the tax determined in the Pro Forma Statement of Comprehensive Income. 12. The amount of cash and cash equivalents must be determined (balancing figure)
