Answer ALL questions in this paper.

$[100$ MARKS$]$

QUESTION $1$

$(20$ Marks$)$

$1\mathrm{.}1$

REQUIRED

Study the information provided below and determine whether Neston Traders should borrow the cash to settle the account. Motivate your answer by calculating the cost of forfeiting the discount $($expressed as a percentage to two decimal places$).$

$(5$ marks$)$

INFORMATION

Neston Traders purchased inventory on credit for R$30000.$ The supplier offered Neston Traders the option to settle the account by paying R$28800$ up to $10$ days after the sale or pay R$30000$ by the end of $60$ days. Neston Traders can borrow cash from its bank at a rate of $18$ percent per annum to settle the account within $10$ days.

$1\mathrm{.}2$

REQUIRED

Use the information provided below to calculate the economic order quantity.

$(5$ marks$)$

INFORMATION

Maxwell Wholesalers anticipates sales of $10000$ units per month, a purchase price of R$40$ per unit, an ordering cost of R$12$ per order, and a carrying cost of $20\%$ of the unit cost price.

$1\mathrm{.}3$

REQUIRED

Use the information given below to calculate the value of closing inventory as at $31$ March $2024$ and the value of issues during March $2024$ using the following methods of inventory valuation:

$1\mathrm{.}3\mathrm{.}1$

First$-$in$-$first$-$out

$(5$ marks$)$

$1\mathrm{.}3\mathrm{.}2$

Weighted average cost. $($Express the average cost per unit in Rands and cents.$)$

$(5$ marks$)$

INFORMATION

The following transactions of Seatides Manufacturers took place during March $2024$ in respect of a component used in production:

Date

Transactions

$01$

Opening inventory

$800$ units @ R$20$ per unit

$07$

Purchased from a supplier

$1400$ units @ R$22$ per unit

$15$

Purchased from a supplier

$2700$ units @ R$24$ per unit

$16$

Returned to the supplier $($see $15$th March$)$

$200$ units

$28$

Purchased from a supplier

$300$ units @ R$25$ per unit

$31$

Issued to production during March

$4000$ units

QUESTION $2$

$(20$ Marks$)$

REQUIRED

Use the information provided below to prepare the following:

$2\mathrm{.}1$

Pro Forma Statement of Comprehensive Income for the year ended $31$ December $2024$ using the percentage$-$of$-$sales method.

$(6$ marks$)$

$2\mathrm{.}2$

Pro Forma Statement of Financial Position as at $31$ December $2024.$

$(14$ marks$)$

INFORMATION

The following information was provided by Sharpe Ltd to assist with the preparation of the pro forma financial statements for the financial year ended $31$ December $2024$:

SHARPE LTD

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED $31$ DECEMBER $2023$

R

Sales

$6400000$

Cost of sales

$(4400000)$

Gross profit

$2000000$

Expenses

$(800000)$

Profit before tax

$1200000$

Company tax

$(324000)$

Profit after tax

$876000$

SHARPE LTD

STATEMENT OF FINANCIAL POSITION AS AT $31$ DECEMBER $2023$

R

ASSETS

Non$-$current assets

$2800000$

Fixed$/$Tangible assets

$2800000$

Current assets

$2400000$

Inventories

$800000$

Accounts receivable

$1200000$

Cash

$400000$

Total assets

$5200000$

EQUITY AND LIABILITIES

Shareholders$$ equity

$2600000$

Ordinary share capital

$1200000$

Retained earnings

$1400000$

Non$-$current liabilities

$1600000$

Long$-$term loan: VIP Bank

$1600000$

Current liabilities

$1000000$

Accounts payable

$960000$

Company tax payable

$40000$

Total equity and liabilities

$5200000$

Additional information

$1.$

Sales for the year ended $31$ December $2024$ are expected to be R$8000000.$

$2.$

Company tax is calculated at $27\%$ of the pre$-$tax profit. Company tax payable $($owing$)$ on $31$ December $2024$ will equal to $10\%$ of the tax calculated in the $2024$ Pro Forma Statement of Comprehensive Income.

$3.$

An old machine $($Cost price R$400000$; Accumulated depreciation R$136000)$ is expected to be sold at carrying value $($book value$)$ on $31$ December $2024$ and a new machine with a cost price of R$600000$ will be purchased on the same date to replace it$.$ Total depreciation for the year ended $31$ December $2024$ is expected to be R$560000.$

$4.$

The company$$s closing inventory will change directly with changes in sales for the financial year ended $31$ December $2024.$

$5.$

Accounts receivable represent approximately $18\%$ of the annual sales.

$6.$

The cash balance is expected to remain unchanged.

$7.$

The authorized share capital consists of $500000$ shares of which $300000$ have been issued up to $31$ December $2023.$ Forty percent $(40\%)$ of the unissued shares will be sold at R$3$ each during July $2024.$

$8.$

A final dividend of $80$ cents per share is expected to be recommended on $31$ December $2024$ on all the issued shares and is payable during $2025.$

$9.$

R$200000$ of the loan will be repaid to VIP bank during the financial year ended $31$ December $2024.$

$10.$

Accounts payable will be based on a payment period of $54\mathrm{.}75$ days. Credit purchases for $2024$ are expected to amount to R$5700000.$

$11.$

The cash balance must be calculated $($balancing figure$).$

QUESTION $3$

$(20$ Marks$)$

REQUIRED

Use the information provided below to prepare the following for August and September $2024$:

$3\mathrm{.}1$

Debtors Collection Schedule

$(4$ marks$)$

$3\mathrm{.}2$

Cash Budget

$(16$ marks$)$

INFORMATION

Nissa Limited is planning its business activities for August and