Required: 1. Prepare common-size comparative income statements for the two years for Beach Motors (Pty) Ltd....

  

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Required: 1. Prepare common-size comparative income statements for the two years for Beach Motors (Pty) Ltd. (11) 2. What observations can you make about the common-size statements? List at least four observations. (8) 3. Prepare comparative income statements for Beach motors including columns for the Rands s and for the percentage increase or decrease in each item on the statement. (9) 4. Assume that you are interested in identifying reasons for the changes in selling and administrative expenses and income tax expense. Explain where you would look to find additional information about the change. (2) 2018 2017 Sales revenue R 70,000 R 60,000 Cost of goods sold Gross profit 42,000 30,000 R. 28,000 R 30,000 Selling and administrative expenses 20,000 14,000 Operating income Interest expense Income before tax R 8,000 R16,000 2,000 2,000 R 6,000 R14,000 Income tax expense 2,000 3,000 Net income R 4,000 R11,000 Required: 1. Prepare common-size comparative income statements for the two years for Beach Motors (Pty) Ltd. (11) 2. What observations can you make about the common-size statements? List at least four observations. (8) 3. Prepare comparative income statements for Beach motors including columns for the Rands s and for the percentage increase or decrease in each item on the statement. (9) 4. Assume that you are interested in identifying reasons for the changes in selling and administrative expenses and income tax expense. Explain where you would look to find additional information about the change. (2) 2018 2017 Sales revenue R 70,000 R 60,000 Cost of goods sold Gross profit 42,000 30,000 R. 28,000 R 30,000 Selling and administrative expenses 20,000 14,000 Operating income Interest expense Income before tax R 8,000 R16,000 2,000 2,000 R 6,000 R14,000 Income tax expense 2,000 3,000 Net income R 4,000 R11,000

Answer rating: 100% (QA)

Answer1 Answer2 i First we see that sales decreased from 2017 to 2018 which appears not to be a good ... View the full answer