You are provided with the following historical financial information based on 30 June 2022 financial statements of ABC Company:

Gross profit: $6,850,000

Gross profit margin: 45%

Operating income margin: 4.5%

Net income margin (before tax): 3%

Corporate tax rate: 30%

Debtor collection period: 60 days

Creditors payment period: 80 days

Stock turnover days: 90 days

ABC Company also provides you with the following budget information for the period 1 July 2022 to 30 June 2023:

Sales: $25,000,000

Opening stock 1 July 2022: $800,000

Closing stock 30 June 2023: $500,000

Cost of sales: $4,500,000

Operational expenses: $ 8,000,000

Debtor collection: 30 days = 50% and 60 days = 50%

Creditor payment: 30 days = 25%, 60 days = 25%, and 90 days = 50%.

Complete the income statement of ABC Company. Show your workings. (5 marks)

Income Statement for the year ended 30 June 2022

Sales
Cost of goods sold
Gross profit
Operating expense
Operating income
Interest payment
Net income before tax
Tax
Net income after tax

Use the information above to complete the table and comment on the realism of the budgeted figures of ABC Company by considering the historical figures and the fact that the business is operating in a very competitive market. (5 marks)

	Historical figure	Budgeted figure	Comments with reasons
Sales
Cost of sales
Operational expenses
Stock turnover period
Creditor payment period