QUESTION ONE

$[18$ MARKS$]$

REQUIRED:

Using the information provided below to:

$1\mathrm{.}1.$ Prepare the Budgeted Statement of Comprehensive Income for the year ended

$31$ December $2024(4)$

$1\mathrm{.}2.$ Prepare the Budgeted Statement of Financial Position of Merafe Limited as at

$31$ December $2024.(14)$

INFORMATION:

Merafe Limited

Statement of Comprehensive Income for the year ended $31$ December $2023$

R

Sales $1600000$

Cost of sales $(832000)$

Gross profit $768000$

Expenses $($including depreciation and interest expense$)(325000)$

Profit before tax $443000$

Income tax $(28\%)(124040)$

Profit after tax $318960$

Statement of Financial Position as at $31$ December $2023$

R

ASSETS

Non$-$current assets $900000$

Equipment $900000$

Current assets $464000$

Inventories $192000$

Accounts receivable $160000$

Cash and cash equivalents $112000$

Total assets $1364000$

EQUITY AND LIABILITIES

Equity $791960$

Ordinary share capital $(500000$ shares at R$1$ each$)500000$

Retained earnings $291960$

Long term liability $128000$

Current liabilities $444040$

Accounts payable $288000$

South African Revenue Services $124040$

Current portion of long term borrowings $32000$

Total equity and liabilities $1364000$

Additional information:

$1.$ Sales for $2024$ is expected to increase by $10\%.$

$2.$ The gross profit percentage for $2024$ will be the same as in $2023.$

$3.$ Expenses $($including depreciation and interest expense$)$ will increase to R$375000.$

$4.$ The company will pay company taxation in $2024$ at $27\%.$

$5.$ The company will purchase equipment in $2024$ totalling R$120000.$ Depreciation for $2024$ will total R$102000.$

$6.$ The following will be projected using the percentage of sales method in $2024$:

a$.$ Inventories

b$.$ Accounts receivable

c$.$ Accounts payable

$7.$ The cash balance will remain unchanged for $2024.$

$8.50000$ ordinary shares will be issued at R$1$ each in January $2024.$

$9.$ R$32000$ of the long$-$term loan will be paid by December $2024$ and a further R$28000$ will be payable by December $2025.$

$10.$ The amount owing to South African Revenue Services on $31$ December $2023$ will be paid in January $2024.$ The taxation

payable for $2024$ will be paid in February $2025.$

$11.$ Dividends of $10$ cents per ordinary share will be declared on $30$ November $2024.$ These dividends will be paid in

January $2025.$

$12.$ Any surplus funds will be invested in long term financial investments.