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The following are account balances of GadgetsCom Pty, Ltd., a company selling gadgets, at the end of financial year 20X1 Accounts ($000) Cash at bank

The following are account balances of GadgetsCom Pty, Ltd., a company selling gadgets, at the end of financial year 20X1

Accounts

($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: for GadgetsCom Pty, Ltd.:

a. Prepare a classified Income Statement (11 marks)

b. Incorporating the additional information below, calculate the Gross Profit Margin (GPM) and the Profit Margin (PM) ratios and provide your comment on the companys profitability and efficiency. (6 marks)

c. Prepare the Non-current Assets section of the Balance Sheet. (3 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

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