The following information is provided for Lubners Limited. Consider the information and answer all four questions that follow.

CASE STUDY INFORMATION:

The following information has been extracted from the accounting records of Lubners Limited on $31$ December $2020.$

$2020$

$2019$

Dr

Cr

Dr

Cr

Ordinary share capital

$1728000$

$1728000$

Non$-$current assets

$3462964$

$2910206$

inventories

$665856$

$584640$

Accounts payable

$311328$

$290304$

Accounts receivable

$832608$

$800064$

cash

$338688$

$362304$

Retained earnings $(1$ Jan$)$

$244276$

Long term Loan

$932256$

$1090944$

Other Current liabilities

$1057824$

$809568$

Total Sales $(80\%$ credit sales$)$

$4816512$

$4535424$

Cost of sales $(80\%$ credit purchases$)$

$2530656$

$2340288$

Interest income

$7776$

$9504$

taxation

$207009$

$192159$

Selling and admin expenses

$1141344$

$1069056$

Interest expenses

$149161$

$174551$

Other expenses

$263808$

$274752$

REQUIRED:

QUESTION $1(25)$

Compile the Statement of Comprehensive Income for the year ended $31$ December $2020.$

$($with $2019$ comparative figures$)$

QUESTION $2(25)$

Compile the Statement of Financial Position as at $31$ December $2020.$

$($with $2019$ comparative figures$)$

QUESTION $3(25)$

Evaluate the performance of the company by calculating and commenting on the following ratios:

$$h Gross margin

$$h Profit margin

$$h Return on assets

$$h Return on equity

$$h Current ratio

$$h Acid test ratio

QUESTION $4(25)$

REQUIRED: Read the information provided below on a capital acquisition planned by Lubners Limited and advise them whether to undertake the capital expenditure or not.

INFORMATION:

Lubners Limited operates transport division which offers long haul transport. It has a fleet of trucks which are replaced as the maintenance costs become excessive. One of the trucks needs replacing and Lubners Limited is considering the following purchase:

$2$

A Volvo F$1350$ which costs R$1500000$ for the horse and a further R$500000$ for a custom made trailer. This truck will have a useful life of five years after which it will be sold for $10\%$ of its total purchase cost.

The first alternative is to use this purchase in normal operations in which customers are charged per kilometre transported and the expected net cash revenue in the first year is expected to be R$460000$ and this is expected to increase by $10\%$ every year.

A second alternative is to use this purchase for a long term contract with an established client. This contract is for a period of five years with annual cash revenues of R$580000$ for each of the five years.

It is company policy to depreciate vehicles over its useful life on a straight line basis and the cost of capital used to evaluate capital projects is $12\%.$ Internal rate of return is not used in evaluating capital projects.