QUESTION 4: INCOME STATEMENT, NOTE TO THE BALANCE SHEET AND AUDIT REPORT You are provided with information relating to Musica Limited for the year ended 31 December 2015 - NSC Accounting - Question 4 - 2016 - Paper 1

Income Statement for the year ended 31 December 2015

Sales:
Total Sales = R8,412,000
Cost of Sales:
Cost of Sales = R4,595,000

Gross Profit:
Gross Profit = Sales - Cost of Sales
Gross Profit = R8,412,000 - R4,595,000 = R3,817,000

Other Income:
Commission Income = R64,140
Rent Income = R102,240

Total Gross Income:
Total Gross Income = Gross Profit + Other Income
Total Gross Income = R3,817,000 + R64,140 + R102,240 = R3,983,380

Operating Expenses:
Sundry Expenses = R257,400
Bank Charges = R41,005
Audit Fees = R13,000
Packing Materials = R15,600
Repairs and Maintenance = R113,000
Director’s Fees = R768,000
Salaries and Wages = R1,038,500
Employer’s Contributions = R156,000
Bad Debts = R20,275
Depreciation = R30,000

Total Operating Expenses:
Total Operating Expenses = R257,400 + R41,005 + R13,000 + R15,600 + R113,000 + R768,000 + R1,038,500 + R156,000 + R20,275 + R30,000 = R2,968,780

Operating Profit:
Operating Profit = Total Gross Income - Total Operating Expenses
Operating Profit = R3,983,380 - R2,968,780 = R1,014,600

Interest Income:
Interest Income = R3,000

Profit Before Interest and Tax:
Profit Before Interest and Tax = Operating Profit + Interest Income
Profit Before Interest and Tax = R1,014,600 + R3,000 = R1,017,600

Income Tax:
Income Tax = R300,000

Net Profit After Tax:
Net Profit After Tax = Profit Before Interest and Tax - Income Tax
Net Profit After Tax = R1,017,600 - R300,000 = R717,600