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How to calculate gross profit percentage will be mItaned

How to calculate gross profit percentage will be mItaned

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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How to calculate gross profit percentage will be mItaned

13:06 ← Expert Q&A INFORMATION PREMIER LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2021 Sales Cost of sales Gross profit Operating expenses (including depreciation) Operating profit Interest on loans Profit before tax Income tax (28%) Profit after tax PREMIER LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021 ASSETS Non-current assets Fixed Assets Current assets Inventories Trade and other receivables Cash and cash equivalents Total assets EQUITY AND LIABILITIES Shareholders' equity Ordinary share capital (1 500 000 shares) Retained earnings R 7 200 000 (5 040 000) 2 160 000 (880 000) 1 280 000 (192 500) 1 087 500 (304 500) 783 000 R 4 200 000 4 200 000 2 880 000 1 440 000 1 080 000 360 000 7.080 000 3 771 000 1 500 000 2 271 000
Transcribed Image Text:13:06 ← Expert Q&A INFORMATION PREMIER LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2021 Sales Cost of sales Gross profit Operating expenses (including depreciation) Operating profit Interest on loans Profit before tax Income tax (28%) Profit after tax PREMIER LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021 ASSETS Non-current assets Fixed Assets Current assets Inventories Trade and other receivables Cash and cash equivalents Total assets EQUITY AND LIABILITIES Shareholders' equity Ordinary share capital (1 500 000 shares) Retained earnings R 7 200 000 (5 040 000) 2 160 000 (880 000) 1 280 000 (192 500) 1 087 500 (304 500) 783 000 R 4 200 000 4 200 000 2 880 000 1 440 000 1 080 000 360 000 7.080 000 3 771 000 1 500 000 2 271 000
09:17 ← Expert Q&A Non-current assets Fixed Assets Current assets Inventories Trade and other receivables Cash and cash equivalents Total assets EQUITY AND LIABILITIES Shareholders' equity Ordinary share capital (1 000 000 shares) Retained earnings Non-current liabilities Long term loan Current liabilities Trade and other payables Income tax payable Total equity and liabilities 3 800 000 3 800 000 a. 2 030 000 1 050 000 700 000 280 000 5 830 000 2 550 000 1 000 000 1 550 000 Additional information 1. Sales for the year ending 31 December 2022 is expected to increase by 10%. 2. The existing gross profit percentage will be maintained in 2022. Other operating expenses (excluding depreciation) are expected to increase by 8% in 2022. 500 000 ordinary shares will be issued on 1 March 2022 at a value of R1.20 each. b. 1 735 000 1 735 000 3. 4. 5. The company will purchase a property costing R800 000 on 1 July 2022. A long-term loan will be taken out to fund the purchase. Monthly instalments of R16 828 will be payable on this loan beginning on 31 July. Interest of R43 300 will be paid on this loan for the period 1 July 2022 to 31 December 2022. C. 1 545 000 1 260 000 285 000 5 830 000 6. 10% of the current long-term loan will be repaid during 2022. Interest paid on this loan will amount to R181 500 7. New plant and equipment costing R420 000 will be purchased for cash during April 2022. 8. Total depreciation for the year ending 31 December 2022 is expected to amount to R462 000. 9. The percentage of sales method must be used for the following items: Inventories Trade and other receivables Trade and other payables 10. Dividends of 10 cents per share will be declared in November 2022 and will be paid in March 2023. 11. Income tax payable is 28% of the tax determined in the Pro Forma Statement of Comprehensive Income. Amounts owing to the South African Revenue Services for balances outstanding on 31 December 2021 will be paid by 31 January 2022. Taxes owing for the year ended 31 December 2022 will be paid by 31 January 2023. 12. A maximum cash balance of R320 000 will be maintained on 31 December 2022. 13. Any excess cash will be invested in long-term financial assets.
Transcribed Image Text:09:17 ← Expert Q&A Non-current assets Fixed Assets Current assets Inventories Trade and other receivables Cash and cash equivalents Total assets EQUITY AND LIABILITIES Shareholders' equity Ordinary share capital (1 000 000 shares) Retained earnings Non-current liabilities Long term loan Current liabilities Trade and other payables Income tax payable Total equity and liabilities 3 800 000 3 800 000 a. 2 030 000 1 050 000 700 000 280 000 5 830 000 2 550 000 1 000 000 1 550 000 Additional information 1. Sales for the year ending 31 December 2022 is expected to increase by 10%. 2. The existing gross profit percentage will be maintained in 2022. Other operating expenses (excluding depreciation) are expected to increase by 8% in 2022. 500 000 ordinary shares will be issued on 1 March 2022 at a value of R1.20 each. b. 1 735 000 1 735 000 3. 4. 5. The company will purchase a property costing R800 000 on 1 July 2022. A long-term loan will be taken out to fund the purchase. Monthly instalments of R16 828 will be payable on this loan beginning on 31 July. Interest of R43 300 will be paid on this loan for the period 1 July 2022 to 31 December 2022. C. 1 545 000 1 260 000 285 000 5 830 000 6. 10% of the current long-term loan will be repaid during 2022. Interest paid on this loan will amount to R181 500 7. New plant and equipment costing R420 000 will be purchased for cash during April 2022. 8. Total depreciation for the year ending 31 December 2022 is expected to amount to R462 000. 9. The percentage of sales method must be used for the following items: Inventories Trade and other receivables Trade and other payables 10. Dividends of 10 cents per share will be declared in November 2022 and will be paid in March 2023. 11. Income tax payable is 28% of the tax determined in the Pro Forma Statement of Comprehensive Income. Amounts owing to the South African Revenue Services for balances outstanding on 31 December 2021 will be paid by 31 January 2022. Taxes owing for the year ended 31 December 2022 will be paid by 31 January 2023. 12. A maximum cash balance of R320 000 will be maintained on 31 December 2022. 13. Any excess cash will be invested in long-term financial assets.
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