EAR REQUIRED use aurust 201 using seporate manetary cakmes fer sadh nerehi nfrma
ID: 2330549 • Letter: E
Question
EAR REQUIRED use aurust 201 using seporate manetary cakmes fer sadh nerehi nfrmation pravides to prepare the Pro-Fom i 2013 lusing seporabe monetary coes for a 125) Stanamert at opraseroe Income er J for haly The Statament ot Comgrahenshve Inianas of Farmant utd lar ts year endes 50 Jure 225 folows: 216 000 Ozeratie expenses Other operating esperdes Additional information Seles for the period April to June 2019 are fiorecast a: 9482 000 per manth, Soles for luly 3035 are expected to be 9% greater than the sales for ung m9. A decrease of 10% is espened aring August 2019. Cash sales account for 60% af the tatal sales, with the balance of the poles on croat Five percent (5%) of the credit sales are expected tn be meemalie and dese are irmen on three month ifter the sale 3 The exlisting mark-up percentage on cost wil be maintained during ldy and August 2039 The rental agreement makes provision for an increase of 12% each year, eHectrea from 01 July salaries increase by 10% on 01 August each year. 6 The amount spent on odvertising each month is caloulsted as a percentage of soles. The percentape for the period ended 30 June 2019 wil be maintained in the next financal Depreciation for the year ended 30 June 2019 ws calculated as a percentage on the cost price of the equipment, R400 000. New equipment with a cost price 8120 000 wilbe purchased on 01 luly 2019 a Ocher operating expenses are spread evenly throughout the year and are expected to incresse bry 10% in the new financial year. Repayments towards the loan wil result n interest expense droppng by 10% per month interest expense for June 2019 is expected to amount to R6 000, PROGRAMME HANDBOOK: JANUARY 2018 INTAKEExplanation / Answer
Statement showing "Pro-forma Statement" of Comprehensive Income for July & August 2019:
W.N. 1 - Sales
Forcasted sales for April to June (per month) = R 480,000
Expected Sales for the month of July = R 480,000 * 110% = R 504,000
Expected Sales for the month of August = R 480,000 * 90% = R 432,000
W.N. 2 - Cost of Sales
% of Cost of sales = 400,000 / 600,000 = 66.67% or 2/3 of sales
Cost of Sales for the month of July = R 504,000 * 2/3 = R 336,000
Cost of Sales for the month of August = R 432,000 * 2/3 = R 288,000
W.N. 3 - Rent Income
Existing Rent Income per annum = R 216,000
Revised Rent Income per annum = R 216,000 * 1.12 = R 241,920
Revised Rent per month = R 241,920/12 = R 20,160
W.N. 4 - Salaries
As it is given in the question that the salary is increased @ 10% from Aug 1, every year.
Therefore, let the salary as on 1st July, 2018 be x
=> 1x + (1x * 1.1) = 655,000
=> 13.1x = 655,000
=> x = 50,000
Therefore, salary as on 1st July, 2018 = R 50,000
Revised salary from 1st Aug, 2018 * 1.1 = R 55,000
Revised salary from 1st Aug, 2019 * 1.1 = R 60,500
W.N. 5 - Advertisement
Advertisement as % of sales = 240,000/6000,000 = 4%
Therefore, Advertisement expenses for the month of July = 504,000 * 4% = R 20,160
Advertisement expenses for the month of August = 432,000 * 4% = R 17,280
W.N. 6 - Bad Debts
W.N. 7 - Depreciation
% of Depreciation = 60,000/400,000 = 15%
It is assumed that depreciation is calculated on straight line method of depreciation.
Therefore, Depreciation for July and Aug = (400,000 * 15% * 1/12) + (120,000 * 15% * 1/12) = 6,500
W. N. 8 - Other operating expenses
Existing operating expenses per month = 300,000/12 = 25,000
Revised operating expenses per month = 25,000 * 110% = R 27,500
W. N. 9 - Interest expenses
Particulars July (R) August (R) Sales (W.N. 1) 504,000 432,000 Less: Cost of Sales (W.N. 2) (336,000) (288,000) Gross Profit 168,000 144,000 Add: Rent Income (W.N. 3) 20,160 20,160 188,160 164,160 Less: Operating Expenses: Salaries (W.N. 4) (55,000) (60,500) Advertisement (W.N. 5) (20,160) (17,280) Bad Debts (W.N. 6) (10,080) (8,640) Depreciation (W.N. 7) (6,500) (6,500) Other operating expenses (W. N. 8) (27,500) (27,500) Operating Profit 68,920 43,740 Less: Interest expenses (W. N. 9) (5,400) (4,800) Net Profit 63,520 38,940Related Questions
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