(20 MARKS)

QUESTION 1

INFORMATION (For Question 1)

The Statement of Comprehensive Income and extract of the Statement of Changes in Equity of Chippa Ltd are provided below:

CHIPPA LTD

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER:

	2022 (R)	2021 (R)
Sales	18 800 000	16 800 000
Cost of sales	(7 800 000)	(6 800 000)
Gross profit	11 000 000	10 000 000
Other operating income	600 000	560 000
Distribution expenses	?	?
Administrative expenses	(2 400 000)	(2 400 000)
Operating profit	2 960 000	2 660 000
Interest income	20 600	10 800
Interest expense	(17 400)	(35 200)
Profit before tax	2 963 200	2 635 600
Company tax	(880 000)	(780 000)
Profit after tax	2 083 200	1 855 600

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2022

	R
Balance at 31 December 2021	5 884 000
Profit for the year	2 083 200
Dividends	(763 200)
Balance at 31 December 2022	7 204 000

REQUIRED

Answer the following questions

1.1 Calculate the distribution expenses for the year ended 31 December 2022. (2 marks)

1.2 What changes in financing activities and investing activities possibly took place during 2022? Explain. (4 marks)

1.3 Why are dividends to shareholders not disclosed in the Statement of Comprehensive Income? (2 marks)

1.4 Calculate the retained earnings for the year ended 31 December 2022. (2 marks)

1.5 Critically assess the performance of the company from the information provided with particular attention to sales, gross margin ratio, distribution expenses, administration expenses and profit after tax. (10 marks)