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Answer :
To prepare the Statement of Comprehensive Income for the year ended 28 February 2022, we need to calculate the net profit by deducting all the expenses from the revenues.
Here's the breakdown:
Statement of Comprehensive Income
For the Year Ended 28 February 2022
Revenues:
Sales R 2,863,000
Less: Sales returns R (40,000)
Net Sales R 2,823,000
Cost of Sales R 1,045,000
Gross Profit R 1,778,000
Operating Expenses:
Salaries and Wages R 607,000
Bad Debts R 22,000
Stationery R 33,000
Rates and Taxes R 90,000
Motor Expenses R 149,000
Repairs and Maintenance R 26,000
Telephone R 50,000
Electricity and Water R 75,000
Bank Charges R 9,000
Advertising R 97,000
Total Operating Expenses R 1,158,000
Operating Profit (Net Profit before Interest and Tax) R 620,000
Other Income:
Rent Income R 191,750
Interest on Fixed Deposit R 16,000
Total Other Income R 207,750
Profit before Interest and Tax R 827,750
Interest Expense:
Interest on Loan R 63,000
Profit before Tax R 764,750
Income Tax Expense:
(Tax Rate: Assume applicable tax rate) R (_______)
Net Profit R ________
In this statement, we have calculated the gross profit by subtracting the cost of sales from the net sales. Then, we deducted the operating expenses to obtain the operating profit. Other income, such as rent income and interest on fixed deposit, was added to the operating profit to arrive at the profit before interest and tax. Finally, we deducted the interest expense to obtain the profit before tax.
Note: The income tax expense is not provided in the information given. Please fill in the applicable tax rate and calculate the income tax expense to complete the statement.
Most Takeaway: The company's gross profit of R1,778,000 indicates the profitability of its core operations, while other income from rent and fixed deposit interest contributes to the overall profit before tax.
Criticism: The absence of the income tax expense hinders a complete analysis of the company's financial performance and profitability after tax.
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