1. ICT2641: Income Statement
Please make sure that you have printed the necessary documents for this presentation! You have to work through the Balance Sheet Presentation first!

2. The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers:
Income Statement based on data provided on the left as well as on the Balance Sheet
Owner’s equity R
Sales-in-Cash Banked
Long-term loans R
@ 15% interest
Current liabilities (creditors plus overdraft) R
Fixed assets (land, buildings, plant and equipment) R
Current assets (stock plus debtors) R
Annual sales R
Cost of sales R
Operating expenses R
Tax rate
35%
Owner’s expected return on his investment
40%

3. The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers:
Income Statement based on data provided on the left as well as on the Balance Sheet
Owner’s equity R
Sales-in-Cash Banked
Long-term loans R
@ 15% interest
The Queue:
1. “Ready-for-Sale” costs (COGS)
( )
Current liabilities (creditors plus overdraft) R
Fixed assets (land, buildings, plant and equipment) R
Current assets (stock plus debtors) R
Annual sales R
Cost of sales R
Operating expenses R
Tax rate
35%
Owner’s expected return on his investment
40%

4. The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers:
Income Statement based on data provided on the left as well as on the Balance Sheet
Sales-in-Cash Banked
Owner’s equity R
The Queue:
Long-term loans R
@ 15% interest
1. “Ready-for-Sale” costs (COGS)
( )
Gross Profit
Current liabilities (creditors plus overdraft) R
Gross profit is the Sales-in-Cash Banked (R ) minus the Cost of Sales
(R ) which is equal to R
Fixed assets (land, buildings, plant and equipment) R
Current assets (stock plus debtors) R
Annual sales R
Cost of sales R
Operating expenses R
Tax rate
35%
Owner’s expected return on his investment
40%

5. The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers:
Income Statement based on data provided on the left as well as on the Balance Sheet
Sales-in-Cash Banked
Owner’s equity R
The Queue:
Long-term loans R
@ 15% interest
1. “Ready-for-Sale” costs (COGS)
( )
Gross Profit =
Current liabilities (creditors plus overdraft) R
2. Wages, Salaries & Services (OPEX)
( )
Fixed assets (land, buildings, plant and equipment) R
OPEX must be deducted from the Gross profit. This will in turn give you the Earnings before Interest and Tax (EBIT)
Current assets (stock plus debtors) R
Annual sales R
Cost of sales R
Operating expenses R
Tax rate
35%
Owner’s expected return on his investment
40%

6. The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers:
Income Statement based on data provided on the left as well as on the Balance Sheet
Sales-in-Cash Banked
Owner’s equity R
The Queue:
Long-term loans R
@ 15% interest
1. “Ready-for-Sale” costs (COGS)
( )
Gross Profit =
Current liabilities (creditors plus overdraft) R
2. Wages, Salaries & Services (OPEX)
( )
Fixed assets (land, buildings, plant and equipment) R
Earnings before interest & tax (EBIT) =
Current assets (stock plus debtors) R
Annual sales R
Cost of sales R
Operating expenses R
Tax rate
35%
Owner’s expected return on his investment
40%

7. The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers:
Income Statement based on data provided on the left as well as on the Balance Sheet
Sales-in-Cash Banked
Owner’s equity R
The Queue:
Long-term loans R
@ 15% interest
1. “Ready-for-Sale” costs (COGS)
( )
Gross Profit =
Current liabilities (creditors plus overdraft) R
2. Wages, Salaries & Services (OPEX)
( )
Fixed assets (land, buildings, plant and equipment) R
Earnings before interest & tax (EBIT) =
Current assets (stock plus debtors) R
3. Lenders
( )
Annual sales R
The company needs to repay the loan from the bank. The original loan amount is R at an interest rate of 15%. Therefore the calculation is as follows: R X 15 divided by 100 will give an amount of R
Cost of sales R
Operating expenses R
Tax rate
35%
Owner’s expected return on his investment
40%

8. The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers:
Income Statement based on data provided on the left as well as on the Balance Sheet
Sales-in-Cash Banked
Owner’s equity R
The Queue:
Long-term loans R
@ 15% interest
1. “Ready-for-Sale” costs (COGS)
( )
Gross Profit =
Current liabilities (creditors plus overdraft) R
2. Wages, Salaries & Services (OPEX)
( )
Fixed assets (land, buildings, plant and equipment) R
Earnings before interest & tax (EBIT) =
Current assets (stock plus debtors) R
3. Lenders
( )
Annual sales R
Profit before tax (PBT) =
Cost of sales R
Deduct the loan repayment of R from the EBIT to provide you with the profit before tax (PBT) of R
Operating expenses R
Tax rate
35%
Owner’s expected return on his investment
40%

9. The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers:
Income Statement based on data provided on the left as well as on the Balance Sheet
Sales-in-Cash Banked
Owner’s equity R
The Queue:
Long-term loans R
@ 15% interest
1. “Ready-for-Sale” costs (COGS)
( )
Gross Profit =
Current liabilities (creditors plus overdraft) R
2. Wages, Salaries & Services (OPEX)
( )
Fixed assets (land, buildings, plant and equipment) R
Earnings before interest & tax (EBIT) =
Current assets (stock plus debtors) R
3. Lenders
( )
Annual sales R
Profit before tax (PBT) =
Cost of sales R
4. Taxman
( )
Operating expenses R
Tax rate
35%
The contribution to SARS will be based on the PBT. The current tax rate is 35%, therefore the calculation will be R X 35 divided by 100 = R
Owner’s expected return on his investment
40%

10. The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers:
Income Statement based on data provided on the left as well as on the Balance Sheet
Sales-in-Cash Banked
Owner’s equity R
The Queue:
Long-term loans R
@ 15% interest
1. “Ready-for-Sale” costs (COGS)
( )
Gross Profit =
Current liabilities (creditors plus overdraft) R
2. Wages, Salaries & Services (OPEX)
( )
Fixed assets (land, buildings, plant and equipment) R
Earnings before interest & tax (EBIT) =
Current assets (stock plus debtors) R
3. Lenders
( )
Annual sales R
Profit before tax (PBT) =
Cost of sales R
4. Taxman
( )
Operating expenses R
Profit after tax (PAT) =
Tax rate
35%
The taxman’s contribution (R ) is deducted from the PBT (R ) to give you the profit after Tax (PAT) of R
Owner’s expected return on his investment
40%

11. The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers:
Income Statement based on data provided on the left as well as on the Balance Sheet
Sales-in-Cash Banked
Owner’s equity R
The Queue:
Long-term loans R
@ 15% interest
1. “Ready-for-Sale” costs (COGS)
( )
Gross Profit =
Current liabilities (creditors plus overdraft) R
2. Wages, Salaries & Services (OPEX)
( )
Fixed assets (land, buildings, plant and equipment) R
Earnings before interest & tax (EBIT) =
Current assets (stock plus debtors) R
3. Lenders
( )
Annual sales R
Profit before tax (PBT) =
Cost of sales R
4. Taxman
( )
Operating expenses R
Profit after tax (PAT) =
Tax rate
35%
5. Owner’s expected return
( )
Owner’s expected return on his investment
40%
The owner’s expected return on his original
Investment of R is 40%, therefore it is calculated as follows: R X 40 divided by 100 = R

12. The following figures were taken from the statements of Sharp Shooter Air Rifle Manufacturers:
Income Statement based on data provided on the left as well as on the Balance Sheet
Sales-in-Cash Banked
Owner’s equity R
The Queue:
Long-term loans R
@ 15% interest
1. “Ready-for-Sale” costs (COGS)
( )
Gross Profit =
Current liabilities (creditors plus overdraft) R
2. Wages, Salaries & Services (OPEX)
( )
Fixed assets (land, buildings, plant and equipment) R
Earnings before interest & tax (EBIT) =
Current assets (stock plus debtors) R
3. Lenders
( )
Annual sales R
Profit before tax (PBT) =
Cost of sales R
4. Taxman
( )
Operating expenses R
Profit after tax (PAT) =
Tax rate
35%
5. Owner’s expected return
( )
Owner’s expected return on his investment
40%
Wealth created/(destroyed)
( )

13. This is the end of this presentation, please work through all the examples of similar questions provided in the workbooks under additional material!