The MNO Company is a cosmetic retailer and the CEO

• Sales of facial products in January 2021 is budgeted at R220,000 and is expected to grow with 1% each month.

• Sales of body products are a function of facial product sales at a rate of 30%.
• Sales of vitamins will commence in April 2021 at a budgeted R50,000 per month for

three months, and thereafter is expected to double due to a promotion campaign with a once off cost of R30,000.

• The bank balance on 1 January is R48,000.

• Wages in January will amount to R65,000. A planned retrenchment will lead to a saving on the wage bill of R7,000 per month from July onwards. In December, all

employees receive a thirteenth cheque equal to one month’s wages.

• Rent is R30,000 per month. The rental lease is up for renewal on 1 November and a 5% increase is expected.

• Water and electricity in January is R3,050. Apart from a special once-off electricity levy of R1,000 in May, no price hike is expected.

• Purchases is 70% of estimated monthly sales.

• Repairs and maintenance is R5,000 in January and is expected to decline by 5% per month.

• A delivery van will be purchased for R400,000 on 31 December 2021. A R70,000 deposit will be paid on that date, with the balance due on 31 January 2022.
• Unpaid credit sales at 31 December 2021 is estimated at R100,000 and at 1 January 2021 amounted to R30,000.
• Stock (inventory) on hand on 31 December 2021 will be value at was R60,000 and at 1 January 2021 R40,000.
• The tax rate is 28%. Tax has not been paid yet.
• The book value of other equipment on balance sheet date will be R650,000. Ignore depreciation.
• Purchases to the amount of R5,000 will be delivered to MNO Cosmetics on December 30th 2021, but only paid on 15 January 2022.
• The share capital will remain unchanged at R500,000 for the period and consist of 500,000 R1 ordinary shares.
• A dividend of R20,000 will be declared on 31 December 2021 and paid on 31 January 2022.
• Apart from the information herein contained, no other amounts will be unpaid on 1 January 2021 or 31 December 2021.
• The retained earnings balance on 31 December 2020 was R268,000.
• 2020 ratio’s were as follows:
  • RoE: 10% o   D:E: 50% o   GP%: 35% o   NP%: 5%
  • EPS: 20 cents
  • DPS: 3 cents
  • Dividend cover: 5
  • Current ratio: 1,5
  • Quick ratio: 1