Analyze the income statement for 2022 and 2023, calculating the sales increase, gross profit margin for 2022, and expenses as a percentage of sales for 2023.

You're on a roll — Here are the solutions for Question 6: 6.1 Income Statement Analysis 6.1.1 By how much did sales increase in 2023? Step 1: Identify sales for 2022 and 2023. Sales 2022 = R 550\,000 Sales 2023 = R 680\,000 Step 2: Calculate the increase in sales. Sales Increase = Sales_2023 - Sales_2022 Sales Increase = R 680\,000 - R 550\,000 Sales Increase = R 130\,000 The sales increased by R 130 000. 6.1.2 Calculate the gross profit margin for 2022. Step 1: Identify gross profit and sales for 2022. Gross Profit 2022 = R 180\,000 Sales 2022 = R 550\,000 Step 2: Calculate the gross profit margin. Gross Profit Margin = Gross ProfitSales × 100\% Gross Profit Margin = R 180\,000R 550\,000 × 100\% Gross Profit Margin ≈ 0.32727 × 100\% Gross Profit Margin ≈ 32.73\% The gross profit margin for 2022 is approximately 32.73%. 6.1.3 Calculate the expenses as a percentage of sales for the 2023 financial year. Step 1: Identify expenses and sales for 2023. Expenses 2023 = R 148\,000 Sales 2023 = R 680\,000 Step 2: Calculate expenses as a percentage of sales. Expenses as \% of Sales = ExpensesSales × 100\% Expenses as \% of Sales = R 148\,000R 680\,000 × 100\% Expenses as \% of Sales ≈ 0.217647 × 100\% Expenses as \% of Sales ≈ 21.76\% The expenses as a percentage of sales for 2023 is approximately 21.76%. 6.2 What effect will shrinkage have on the profit of the business? Shrinkage refers to the loss of inventory due to theft, damage, or obsolescence. It will decrease the profit of the business because it either increases the cost of goods sold or is recorded as an expense, thereby reducing both gross profit and net profit. 6.3 Bruyn Waves Projects - Income and Net Profit 6.3.1 Calculate the gross income for the year. Step 1: Identify all income items. Services rendered = R 30\,000 Rent income = R 5\,000 Discount received = R 8\,000 Interest received = R 3\,000 Step 2: Sum the income items to find the gross income. Gross Income = Services rendered + Rent income + Discount received + Interest received Gross Income = R 30\,000 + R 5\,000 + R 8\,000 + R 3\,000 Gross Income = R 46\,000 The gross income for the year is R 46 000. 6.3.2 Calculate the net profit for the year. Step 1: Identify all expense items. Water and electricity = R 1\,000 Telephone and fax = R 5\,000 Wages = R 12\,000 Insurance = R 2\,400 Advertising = R 1\,500 Step 2: Calculate total expenses. Total Expenses = R 1\,000 + R 5\,000 + R 12\,000 + R 2\,400 + R 1\,500 Total Expenses = R 21\,900 Step 3: Calculate net profit. Net Profit = Gross Income - Total Expenses Net Profit = R 46\,000 - R 21\,900 Net Profit = R 24\,100 The net profit for the year is R 24 100. That's all for this question! What's next? 📸