Use the information provided below to prepare the Proforma Statement of Financial Position of CVB Enterprises as at 31 December 2021. 1.2 (11 marks) INFORMATION The following information was extracted from the statement of financial position of CVB Enterprises on 31 December 2020. R Cash in bank 160 000 Equity 2 200 000 Equipment 1 000 000 Inventories 640 000 Accounts payable 600 000 Non-current liabilities 0 Accounts receivable 1 000 000 Additional information The sales for the year ended 31 December 2020 was R4 000 000. The sales are expected to increase by R1 000 000 for the year ended 31 December 2021. The after-tax return on sales is estimated at 10%. Seventy percent (70%) of the profit after tax is expected to be paid out as dividends during 2021. An unfavourable bank balance of R100 000 is expected on 31 December 2021. The amount of external funding required (non-current liabilities) must be calculated. Except for the above, the percentage-of-sales method must be used to prepare the statement of financial position. Question 2 Answer the questions from the information provided. 2.1 Use the information provided below to calculate the following: Net value of issues to the production department for May 2021 using the first-in-first-out (FIFO) method. 2.1.1 (3 marks) Value of closing inventory as at 31 May 2021 using the weighted average cost method. (Round off the weighted average cost per unit to the nearest cent.) 2.1.2 (4 marks) Net value of issues to the production department for May 2021 using the last-in-first-out (LIFO) method. (3 marks) INFORMATION The following information was extracted from the records of Candy Limited, a manufacturing company, for an inventory item: Date Transaction details for May 2021 01 Opening inventory consisted of 1 000 units @ R10 each. 05 An invoice was received for 19 000 units purchased @ R11 each. 09 Returned 3 000 damaged units (purchased 05 May) to the supplier. 21 An invoice was received for 8 000 units purchased at R12 each. 31 Issues to the production department for May totalled 16 000 units. 2.1.3 Use the information provided below to calculate the annual Economic Order Quantity (EOQ). (5 marks) INFORMATION The monthly sales of an item are 800 units. The selling price is R3 per unit and the items are sold at cost plus 50%. The ordering cost amounts to R25 per order and the holding cost is equal to 20% of the unit cost of the item. 2.2 Use the information provided below to calculate the cost (as a percentage expressed to two decimal places) to Ethekwini Traders of not accepting the discount. (5 marks) INFORMATION Bruce Wholesalers sold goods on credit to Ethekwini Traders for R3 000. The usual credit terms to Ethekwini Traders are 30 days but the supplier is prepared to allow a rebate of R105 if the account is settled within 12 days. 2.3 Question 3 Use the following information provided by Viking Enterprises to prepare the following for January and February 2022: 3.1 Debtors Collection Schedule (4 marks) Cash Budget (16 marks) INFORMATION The following information was provided by Viking Enterprises to assist in the preparation of the cash budget for the first two months of 2022: 1. A bank overdraft of R50 000 is expected on 01 January 2022. 2. Forecasted credit sales are as follows: December 2021 January 2022 February 2022 R180 000 R210 000 R240 000 3. Credit sales usually make up 60% of the total sales. Cash sales make up the balance. 4. Credit sales are normally collected as follows: 20% in the month in which the transaction takes place. These debtors are entitled to a 5% discount. 75% in the following month. The rest is usually written off as bad debts. 5. Budgeted purchases of inventory are as follows: December 2021 January 2022 February 2022 Credit purchases R70 000 R90 000 R85 000 Cash purchases R60 000 R80 000 R88 000 3.2 Viking Enterprises expects a discount of 10% on half the cash purchases. Creditors usually offer credit terms of 30 days, which are adhered to. 6. The salaries for February 2022 are expected to amount to R55 080, after an 8% increase takes effect from 01 February 2022. 7. Interest at 18% per annum on the loan balance is payable monthly. The loan balance on 01 January 2022 is expected to be R200 000 and capital repayments of R10 000 are made at the end of each month. 8. Part of the building is sublet to a tenant. The rental for the year ended 31 December 2021 amounts to R65 500. The rental agreement, which came into effect during 2019, stipulated that the rental would increase by 10% on 01 February each year. 9. Other operating expenses amount to R10 000 per month. This amount includes R2 000 for depreciation. Operating expenses are paid for in the month in which they are incurred. Question 4 Answer the questions from the information provided. 4.1 Calculate the following ratios for 2020 only. Express answers to two decimal places. 4.1.1 Gross margin (2 marks) 4.1.2 Inventory turnover (2 marks) 4.1.3 Debtor collection period (2 marks) 4.1.4 Creditor payment period (2 marks) 4.1.5 Return on equity (2 marks) 4.1.6 Debt to assets (2 marks) 4.1.7 Acid test ratio (2 marks) 4.2 Use the appropriate answers from question 4.1 to comment on the following: 4.2.1 The profitability of the company from the shareholders point of view. (2 marks) 4.2.2 The ability of the company to pay its short-term debts under distress business conditions. (2 marks) The ability to collect debts timeously. (2 marks) INFORMATION The extracts of the financial statements of Stimvac Limited for 2020 and 2019 are provided below. The company tax rate is 30%. All purchases and sales are on credit. 4.2.3 2020 2019 R R Sales 1 900 000 Cost of sales 1 200 000 Operating profit 440 000 Profit before tax 380 000 Equity 2 920 000 2 660 000 Inventories 720 000 400 000 Non-current assets 2 650 000 2 250 000 Accounts payable 360 000 380 000 Cash and cash equivalents 10 000 10 000 Bank overdraft 40 000 20 000 Non-current liabilities 500 000 200 000 Accounts receivable 440 000 600 000 Question 5 Use the information provided below to answer the following questions. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after Question 5. 5.1 Calculate the Payback Period of Project A (expressed in years and months). (3 marks) Calculate the Accounting Rate of Return (on average investment) of Project B (expressed to two decimal places). 5.2 (5 marks) 5.3 Calculate the Net Present Value of each project. (Round off amounts to the nearest Rand.) (6 marks) 5.4 Based on your answers from question 5.3, which project should be chosen? Explain why. (1 marks) Calculate the Internal Rate of Return of Project A (expressed to two decimal places). (5 marks) INFORMATION Hampshire Limited has the option to invest in machinery in Project A and Project B but finance is only available to invest in one of them. The initial cost of each project is R600 000. You are given the following projected data: PROJECT A Annual net profit (loss): R Year 1 20 000 Year 2 40 000 Year 3 60 000 Year 4 80 000 Year 5 (10 000) PROJECT B Annual net cash inflows: R Year 1 160 000 Year 2 160 000 Year 3 160 000 Year 4 160 000 Year 5 160 000 5.5 Number of Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 25% 1 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8696 0.8621 0.8547 0.8475 0.8403 0.8333 0.8000 2 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.8116 0.7972 0.7831 0.7695 0.7561 0.7432 0.7305 0.7182 0.7062 0.6944 0.6400 3 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7312 0.7118 0.6931 0.6750 0.6575 0.6407 0.6244 0.6086 0.5934 0.5787 0.5120 4 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6587 0.6355 0.6133 0.5921 0.5718 0.5523 0.5337 0.5158 0.4987 0.4823 0.4096 5 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5935 0.5674 0.5428 0.5194 0.4972 0.4761 0.4561