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QUESTION TWO Use the following financial data to prepare the Pro Forma Statement of Financial Position as at 31 December 2021

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QUESTION TWO
Use the following financial data to prepare the Pro Forma Statement of Financial Position as at 31
December 2021.
(20 marks)
INFORMATION
Jak Limited has provided the following financial data needed to prepare the Pro Forma Statement of Financial Position
as at 31 December 2021.
Sales for 2021 are estimated to be R3 000 000. A vehicle costing R400 000 will be purchased during 2021. Total
depreciation for 2021 is expected to amount to R280 000. Inventories represent 30% of sales. Accounts receivable
represent 25% of sales and the business maintains a cash balance of R50 000. There are 40 000 shares at R5 each
and are expected to be issued during July 2021. In addition, the business predicts a 12% net profit margin.
A final dividend of 40 cents per share is expected to be declared, payable during 2022.
Accounts payable represent 15% of sales. The balance of the existing loan is expected to be reduced by one third by
means of monthly repayments.
The amount of external funding (non-current liabilities) must be determined.
The Statement of Financial Position as at 31 December 2020 is as follows:
JAK LIMITED
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020
R
ASSETS
Non-current assets 1 000 000
Fixed/Tangible assets 1 000 000
Current assets
900 000
Inventories
Accounts receivable
Cash and cash equivalents
600 000
250 000
50 000
2.1
Total assets
1 900 000
EQUITY AND LIABILITIES
Equity
1 400 000
Ordinary share capital (300 000 shares)
Retained earnings
1 200 000
200 000
Non-current liabilities
300 000
Long-term loan
300 000
Current liabilities
200 000
Accounts payable 200 000
Total equity and liabilities 1 900 000
2.2 Study the information given below and prepare the production budget for January, February and
March 2021 (5marks)