REQUIRED

Answer the following questions based on the information provided below:

1.1 Calculate the distribution expenses for the year ended 31 December 2022. (2 marks)

1.2 What changes in financing activities and investing activities possibly took place during 2022? Explain. (4 marks)

1.3 Why are dividends to shareholders not disclosed in the Statement of Comprehensive Income? (2 marks)

1.4 Calculate the retained earnings for the year ended 31 December 2022. (2 marks)

1.5 Critically assess the performance of the company from the information provided with particular attention to sales, gross margin ratio, distribution expenses, administration expenses and profit after tax. (10 marks)

INFORMATION The Statement of Comprehensive Income and extract of the Statement of Changes in Equity of Chippa Ltd are provided below:

CHIPPA LTD STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER:

2022 (R ) 2021 (R)

Sales 18 800 000 16 800 000

Cost of sales (7 800 000) (6 800 000)

Gross profit 11 000 000 10 000 000

Other operating income 600 000 560 000

Distribution expenses ? ?

Administrative expenses (2 400 000) (2 400 000)

Operating profit 2 960 000 2 660 000

Interest income 20 600 10 800

Interest expense (17 400) (35 200)

Profit before tax 2 963 200 2 635 600

Company tax (880 000) (780 000)

Profit after tax 2 083 200 1 855 600

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2022 R

Balance at 31 December 2021 5 884 000

Profit for the year 2 083 200

Dividends (763 200)

Balance at 31 December 2022 7 204 000