Prepare the Pro-Forma Statement of Financial Position for the year ending 31 December 2023
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Prepare the Pro-Forma
31 December 2023
INFORMATION
Sibiya Projects
Statement of Comprehensive Income for the year ended 31 December 2022
R
Sales 10 000 000
Cost of sales (5 750 000)
Gross profit 4 250 000
Variable, selling and administrative costs (1 500 000)
Fixed selling and administrative costs (500 000)
Net profit 2 250 000
Statement of Financial Position for the year ended 31 December 2022
ASSETS R
Non-current assets 800 000
Property, plant and equipment 800 000
Current assets 3 400 000
Inventories 1 600 000
Accounts receivable 600 000
Cash 1 200 000
TOTAL ASSETS 4 200 000
EQUITY AND LIABILITIES
Equity 3 760 000
Current liabilities 440 000
Accounts payable 440 000
TOTAL ASSETS AND LIABILITIES 4 200 000
Additional information
A. The sales budget for 2023 is as follows:
First Quarter Second Quarter Third Quarter Fourth Quarter
R2 625 000 R2 750 000 R2 875 000 R2 750 000
B. 90% of sales is collected in the quarter of the sale and 10% in the quarter following the sale
C. The gross margin ratio for 2023 is expected to be the same as for 2022.
D. Inventory is purchased in the quarter of the expected sale. 80% of inventory purchases is paid for
in the quarter of purchase and 20% is paid for in the quarter following the purchase.
E. The inventories balance at the end of each quarter is expected to be the same as the end of the
last quarter of 2022 viz. R1 600 000.
F. Variable selling and administrative expenses will be the same as for 2022 and will include annual
depreciation of R160 000 on property, plant and equipment.
G. On 31 December 2023 an old equipment originally costed R180 000 and accumulated depreciation
of R150 000 will be traded-in for new vehicle. The new vehicle will cost R400 000 and the trade-in
value of the old vehicle is expected to be R50 000.
H. The proprietor’s drawings for 2023 are estimated to be R1 527 000.
I. The cash balance (bank) must be calculated
Step by step
Solved in 3 steps with 1 images
