QUESTION TWO Use the following financial data to prepare the Pro Forma Statement of Financial Position as at 31 December 2021. (20 marks) INFORMATION Jak Limited has provided the following financial data needed to prepare the Pro Forma Statement of Financial Position as at 31 December 2021. Sales for 2021 are estimated to be R3 000 000. A vehicle costing R400 000 will be purchased during 2021. Total depreciation for 2021 is expected to amount to R280 000. Inventories represent 30% of sales. Accounts receivable represent 25% of sales and the business maintains a cash balance of R50 000. There are 40 000 shares at R5 each and are expected to be issued during July 2021. In addition, the business predicts a 12% net profit margin. A final dividend of 40 cents per share is expected to be declared, payable during 2022. Accounts payable represent 15% of sales. The balance of the existing loan is expected to be reduced by one third by means of monthly repayments. The amount of external funding (non-current liabilities) must be determined. The Statement of Financial Position as at 31 December 2020 is as follows: JAK LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020

ASSETS Non-current assets 1 000 000

Fixed/Tangible assets 1 000 000

Current assets

Inventories R600 000

Accounts receivable R250 000

Cash and cash equivalents R50 000 2.

Total assets 1 900 000

EQUITY AND LIABILITIES

Equity 1 400 000

Ordinary share capital (300 000 shares) 1 200 000 200 000

Retained earnings R200 000

Non-current liabilities

Long-term loan 300 000

Current liabilities

Accounts payable 200 000

Total equity and liabilities 1 900 000