Question: i would like the answer to question 4 please CASE STUDY INFORMATION The following information has been extracted from the accounting records of Lubners Limited
CASE STUDY INFORMATION The following information has been extracted from the accounting records of Lubners Limited on 31 December 2020 2020 2019 Dr Dr OF 1 728 000 1728 000 Ordinary share capital Non-current assets inventories Accounts payable Accounts receivable 3462964 665 856 2930206 584840 311128 290 304 832 608 800 064 362 304 cah Retained earnings (1 Jan Long term loan Other Current abilities 932 256 1057 824 244 275 1 090 944 809 568 4816512 4 535 424 2530 656 2340 288 7776 9 504 Total Sales (80% credit sales) Cost of sales 80% credit purchases Interest income taxation Selling and admin expenses Interest expenses Other expenses 207 00 1141 344 149 161 263 808 192 159 1069056 174551 274 752 (25) REQUIRED QUESTION (25) Compile the Statement of Comprehensive income for the year ended 31 December 2020 with 2019 comparative figures) QUESTION 2 Compile the Statement of Financial Position as at 31 December 2020 (with 2019 comparative figures) QUESTION 3 1251 Evaluate the performance of the company by calculating and commenting on the following ration Gross margin Profit margin Return on assets Return on equity Current ratio Add test ratio QUESTION 4 (25) REQUIRED. Read the information provided below on a capital acquisition planned by Lubners Limited and advise them whether to undertake the capital expenditure or not INFORMATION Lubners Limited operates transport division which offers long haul transport. It has a fleet of trucks which are replaced as the maintenance costs become excessive. One of the trucks needs replacing and tubers Limited is considering the Following purchase A Volvo F1350 which costs R1 500 000 for the horse and a further R500 000 for a custom made trailer. This truck will have a useful life of five years after which will be sold for 10% of its total purchase cost The first alternative is to use this purchase in normal operations in which customers are charged per kilometre transported and the expected net cash revenue in the first year is expected to be R460 000 and this is expected to Increase by 10% every year. A second alternative is to use this purchase for a long term contract with an established dient. This contract is for a period of five years with annual cash revenues of RS30 000 for each of the five years. It is company policy to depreciate vehicles over its useful life on a straight line basis and the cost of capital used to evaluate capital projects is 1256. Internal rate of retum is not used in evaluating capital projects
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