User Account

All Pages

Why the percentage-of-sales method could result

Assignment Help Financial Accounting
Reference no: EM132636036

Dagmar Suppliers Ltd wants to a scenario analysis to assess possible profitability for 2021. The company will consider three different sales scenarios. The pessimistic prediction of sales is R840 000, the most likely sales are R1 125 000 and the most optimistic prediction of sales is R1 350 000.

Dagmar's statement of comprehensive income for 2020 is as follows: Dagmar Suppliers Ltd Statement of comprehensive income for the year ended 31 December 2020

Rand Revenue 950,000

Less: Cost of sales 446,500

Gross profit 503,500

Less: Operating expenses 326,250

Operating profit 281,250

Finance cost 45,000

Profit before tax 177,250

Less: Income tax 53,175

Profit for the year 124,075

Question 1: Apply the percentage-of-sales method to the statement of comprehensive income for 2020 to develop the pessimistic and optimistic pro-forma statements of comprehensive income for 2021. Use the table format below to prepare your answer.

Question 2: Explain why the percentage-of-sales method could result in an overstatement of profits for the pessimistic scenario and an understatement of profits for the optimistic scenario.

Reference no: EM132636036

Questions Cloud

How would this affect forecast of volume : What type of financial impact could this have on the hospital? How would this affect a forecast of volume??
Discussion about the jurisdiction and venue in cyberspace : After reading about the origin of the internet in the textbook, discuss how difficult it is to determine who has jurisdiction over the internet and the global.
Byzantine icon in modern american culture : Is there an equivalent of the Byzantine icon in modern American culture? Why or why not?
List out elements-factors from the levels of analysis : 1) Identify and list out elements/factors from each of the levels of analysis mentioned in the article.
Why the percentage-of-sales method could result : Why the percentage-of-sales method could result in an overstatement of profits for the pessimistic scenario and an understatement of profits
Find the end-to-end delay : Find a formula, in terms of N, L, R, m and a, that characterizes the end-to-end delay of sending the N packets to Alice - find the end-to-end delay
Identify the limitations of the bobo doll experiment : Identify the limitations of the bobo doll experiment and think about potential studies that could be conducted to address the limitations.
Describe the environment and the people being observed : Students are to observe two or more adults unknown to the observer. The student must not be able to hear the subjects being observed and those being observed.
Demonstrate hyperpresidentialism : According to the Hugo Chavez Show, how did the Chavez Presidency demonstrate hyperpresidentialism, i.e., what concrete examples

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd