Please study the attached case study information pertaining to Mr. Jeff Musk and Jeff Manufacturing (Pty) Ltd and answer the following

1)Rewrite the Income Statement and the Balance Sheet of Jeff Manufacturing Pty Ltd; andcomment on the financial performance of Jeff Manufacturing Pty Ltd, did the financial performance improve or deteriorate during the past financial year. Use financial ratio analysis to substantiate your answer and provide a complete interpretation of the financial position of the company.

LETTER FROM AUDITOR Muller Khan Chartered Accountant Muller Khan Chartered Accountant Tel: (08) 786 7234 Martell Building Fax: (08) 786 7233 Perth Tel: (08) 786 7234 Martell Building Fax: (08) 786 7233 Perth REPORT FROM THE AUDITORS 5 JULY 2022 To the shareholders of Jeff Manufacturing Pty Ltd We have examined the financial statements set out on the following pages. In our opinion these To whom it may concern financial statements fairly present the financial position of the company at 30 June 2022 and the results of its operations for the year then ended in the manner required by the Corporations Act. Based on the information provided to me Mr Jeff Musk earns an amount of $ 500 000 per month However, the format of both Income Statement and Balance Sheet should be modified to comply as salary and fringe benefits from Jeff Manufacturing Pty Ltd. with standards and conventions. MULLER KHAN Perth 5 JULY 2022 MULLER KHANREPORT OF THE DIRECTORS FOR THE YEAR ENDED 30 JUNE 2022 JEFF MANUFACTURING PTY LTD To the shareholders BALANCE SHEET AT 30 JUNE 2022 Your directors have pleasure in submitting their report in terms of the Corporations Act. BUSINESS Notes 2022 2021 Share capital 1 000 1 000 The company operated for the entire financial year manufactures specialised parts for the transport and vehicle industry in both local and oversea markets. Shareholders loans 10 651 600 5 637 400 SHARE CAPITAL Distributable reserve 3 054 200 3 029 900 Long term liability (excluding current 2 961 200 1 550 000 No shares were issued during the year under review. portion) 11 FINANCIAL RESULTS Account payable 14 699 700 4 997 800 2022 2021 Current portion of long-term liability 26 96 300 774 900 Net income before taxation 24 300 183 000 Bank overdraft 9 927 300 4 465 000 Taxation Net income after taxation 24 300 183 000 Equipment, fittings and vehicles 7 093 500 5 921 600 FIXED ASSETS Trade investment 164 300 1 415 400 Stock The company is at present, as part of its ongoing policy of presenting meaningful financial 9 291 100 7 476 900 statements, having its fixed assets valued for insurance purposes. The directors' initial Account receivable 27 389 200 5 599 700 investigations and discussions indicate that a minimum realistic value of the plant and equipment having a book value of $ 2 804 700, is $25 000 000. Once the valuation is complete, it is intended Cash on hand 53 200 42 400 to revalue the assets in question in the books of the company. DIVIDENDS No dividend is proposed in respect of the past year. DIRECTORS Jeff Musk Mackenzie MuskJEFF MANUFACUTURING PTY LTD NOTES TO THE FINANCIAL STATEMENTS - 30 JUNE 2022 INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2022 1. ACCOUNTING POLICIES 2022 2021 The financial statements have been prepared on the historical cost basis. PRINCIPAL REVENUE 159 697 500 107 043 200 COST OF SALES The main accounting policies adopted by the company, which are consistent with those of the Opening stock 7 476 900 6 486 900 previous year, are as follows: Purchases 89 881 400 56 820 100 Closing stock 91 100 7 476 900 a. Depreciation DIRECT OPERATING EXPENSES Repairs and maintenance 1 158 600 21100 Fixed assets of the company have been depreciated on a straight line basis over the Depreciation - tools 100 100 100 000 expected useful life of the assets, after taking into account initial allowances on assets Depreciation - plant equip 2 455 300 1 075 800 used in the process of manufacturing. Rent 3 958 100 3 883 100 Wages 28 337 400 22 519 800 b. Stock Water and electricity 1 602 900 1 178 300 OTHER OPERATING EXPENSES Stock has been valued at the lower of cost or net realisable value on a first-in first-out Advertising 531 100 256 000 basis. The cost of finished goods and work in progress includes material and direct labour Accounting fee 407 900 costs only. Auditors' remuneration 199 000 190 000 Bank charges 497 800 469 600 2. PRINCIPAL REVENUE Bad debts 247 100 Depreciation - motor vehicle 905 900 750 900 Principal revenue represents the invoiced value of goods supplied to customers, net of returns and Depreciation - Furn/ fittings 215 600 213 100 discounts allowed. Marketing & entertainment 3 341 300 2 669 000 General expenses 576 100 479 200 Insurance 2 446 700 2 302 900 3. SHARE CAPITAL 2022 2021 Legal expenses 8 100 129 300 Motor vehicle expenses 3 720 000 2 443 200 Authorised: Printing and stationery 259 100 210 500 400 000 shares of $ 1 each $ 400 000 $ 400 000 Salaries and contributions 17 992 900 10 456 800 Telephone 970 700 668 400 Issued: OTHER INCOME 1 000 shares of $ 1 each $ 1 000 $ 1 000 Profit on sale of fixed assets 447 500 Interest received 6 000 304 000 INTEREST PAID 2 127 800 1 317 100 4. SHAREHOLDERS' LOANS NET INCOME FOR THE YEAR 24 300 183 000 Fixed unsecured loans, bearing interest at the rate of 10% (previous year - 9.5%) per annum. No fixed terms of repayment have been set $ 4 500 000 $ 4 500 000 Floating loan accounts, having no fixed term of repayment other than by mutual shareholders' consent. $ 6 151 600 $ 1 137 4005. NON-CURRENT ASSETS Cost Accumulated Net book value Net book value depreciation 2022 2021 2022 2021 Plant and 17 058 800 14 254 100 2 804 700 2 479 400 9. DIRECTORS' EMOLUMENTS equipment Tools 5 523 300 5 281 500 241 800 341 900 As directors $ 1 000 000 Office equipment 589 800 440 600 149 200 267 000 Other $ 10 830 800 $ 4 639 700 Factory fittings 559 500 394 900 164 600 262 300 All director emoluments were allocated on a 50:50 basis for Jeff Musk and Mackenzie Musk Motor vehicles 4 979 800 1 246 600 3 733 200 2 571 000 10. TAXATION 28 711 200 21 617 700 7 093 500 5 921 600 No taxation has been provided for as the company has an (Previous year) (24705500) (18783900) estimated loss for tax purposes amounting to $ 90 100 6. TRADE INVESTMENT 11. LONG TERM LIABILITY 2022 2021 Maple Pty Ltd Outstanding loan on machinery/equipment and vehicles. $ 5 657 500 $ 2 324 900 Shares at cost $ 2 500 $ 2 500 Loan $ 161 800 $ 1 412 900 Current portion of outstanding loan included in accounts payable $ 2 696 300 $ 774 900 TOTAL $ 164 300 $ 1 415 400 12. CONTINGENT LIABILITY The directors are of the opinion that the unlisted $ 200 000 $ 1 400 000 investment's value exceeds The company signed a limited guarantee for the overdraft facility of $ 5 000 000 of Maple Pty Limited 7. STOCK Raw materials $ 9 291 100 $ 7 476 900 8. ACCOUNTS RECEIVABLE The accounts receivables have been pledged/ceded to the company's bankers as security for overdraft facilities.Asset valuations: JEFF MUSK Peter Bowrie (Property valuer consultant of the bank) valued the properties in the name of Jeff STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2022 Musk as follows: ASSETS Residential property - Mill Point Rd, South Perth $ 13 000 000 Holiday home - Dunsborough $ 4 500 000 $ 15 000 000 $ 6 000 000 Residential property - Mill Point Rd, South Perth Vineyard farm - Margaret River Holiday home - Dunsborough $ 5 160 000 TOTAL $23 500 000 Vineyard farm - Margaret River $ 7 500 000 You checked Redbook car values (used by dealers in vehicle trading for determining the values of second hand vehicles) and the vehicle values in the balance sheet of My Jeff are well aligned with Investments: the Redbook car values. JEFF MANUFACTURING Pty Ltd - 50% shareholding $ 1 527 600 The fixed deposit of $750 000 of Mr Jeff has been confirmed with his bank. It is a 12 month fixed JEFF MANUFACTURING Pty Ltd - loan account $ 5 325 800 deposit that will expire 9 months from now. Fixed deposit $ 750 000 The bank credit policy contains the following information regarding the assignment of realistic bank collateral values to assets: Vehicles: Type of collateral Value of collateral 2019 Range Rover $ 130 000 Investments at this bank 100% of the value of the investment 2018 Mercedes 600 SL $ 190 000 Investments at other financial institutions. 90% of the value of the investment Listed shares 50% of the market value 2015 Porsche $ 190 000 Precious coins 60% of the market value. Household goods, Persian carpets and work of art $ 1 000 000 Cession of insurance policies 85% of the surrender value of the policy. Fixed property: residential 80% of value as per bank valuation $ 36 773 400 Fixed property: 70% of value as per bank valuation commercial/industrial farms LIABILITIES Unlisted shares 0% Motor veh 70% of Redbook values or 30% of book values in financial statements of businesses Machinery and equipment 0% if no used market price valuation was obtained. 1* Mortgage on Mill Point Rd, South Perth property $ 11 500 000 40% of used market value provided by experts like 1* Mortgage on Dunsborough property $ 2 500 000 accredited auctioneers and used machinery equipment industry dealers 1 s Mortgage on farm $ 4 500 000 Household goods including carpets and 0%. Only in exceptional cases will a maximum of paintings 40% of investment painting values be considered. Bank loans on $ 400 000 Expert valuation have to be conducted in such $ 50 000 cases. Overdraft Accounts receivable 40% maximum of regular 90 days or less accounts $ 18 950 000 receivable balances. Office equipment factory fittings 0% Net asset value $ 17 823 400 Inventory 0% Investments in unlisted companies loans to | 0% companies