Prepare the pro forma statement of financial position

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Reference no: EM132949215

Question

Use the following information to prepare the Pro Forma Statement of Financial Position of Govan Limited as at 31 december 2021

Information

. Sales for 2020 amounted to 4 000 000. Seventy percent (70%) of the sales were for cash and the balance on credit. The cash sales for 2021 are expected to increase by 30% whilst the credit sales are expected to increase by 40%
. Total purchases (all credit) are expected to amount to R3 000 000.
. Trade and other receivables must be calculated using the percentage-to-sales method
. Accounts payable is based on a payment period of 73 days
. The company maintains a fixed inventory level of R 2 000 000 at the end of each month
. Govan Limited expects to show a net decreasse in cash of R200 000 during 2021
.Equipment with a cost price of R800 000 and accumulated depreciation of R600 000 is expected to be sold at the end of 2021 for R300 000. Additional property with a cost of R4 000 000 will be purchased during 2021. Total depreciation for 2021 is estimated at R800000.
. 200 000 ordinary shares are expected to be sold at R3 each during January
. the company predicts a 20% profit margin (net profit margin)
. Dividends of R500 000 are expected to be paid by the company during 2021
. R1 000 000 will be paid to Jip Bank during 2021. This includes R300 000 for interest on loan
. the amount of external non-current funding required must be calculated

Reference no: EM132949215

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