70.2K

Verified Solution

Link Copied!

QUESTION $1(30$ marks$)$ Hills Investors $($Pty$)$ Ltd $($Hills$)$ is a property development company that has a $31$ December financial year$-$end. You are provided with an extract of the Statement of Financial Position as at $31$ December $2024.$ Statement of Financial Position of Hills Investors $($Pty$)$ Ltd as at $31$ December $2024.$ Notes R Equity and liabilities Equity Ordinary share capital: Class A shares $1,2,3(125000$ shares$)1250000$ Retained earnings$/($accumulated loss$)1,2,3(1$ January $2024)(25450)1224550$ Total equity Liabilities Non$-$current liabilities Loan $55000005500000$ Current liabilities Trade payables $246500$ Other payables $120000366500$ Total equity and liabilities During the year ending $31$ December $2024,$ the following transactions took place and have not yet been recorded: Note $1$: Class B share capital On $1$ January $2024,$ Hills invited the public to buy Class B shares. Hills offered $55000,5\%$ Class B shares with a face value of R$25$ per share. The share issue was underwritten by Capital Under Ltd at a commission of $2\%$ on the selling price. The closing date for the applications was on $31$ January $2024,$ and on that date, $95\%$ of the shares had been applied for by the public. The underwriters took up the other $5\%$ of shares on $31$ January $2024.$ On $29$ February $2024,$ the shares were issued. Share issue costs of R$10000,$ excluding underwriters commission, were paid on the same day. Note $2$: Class A share capital On $1$ April $2024,$ Hills offered $30000$ Class A shares to the public at a price of R$40$ per share. On $1$ May $2024,$ the closing date for applications, shares have been oversubscribed by $12\%.$ On $15$ May $2024,$ the $30000$ shares were issued, share issue costs of R$12000$ were paid in cash. Note $3$: Dividends On $31$ December $2024,$ Hills directors were so happy with the fact that they made a profit of R$570890$ for the year, that they declared a Class A dividend of $25$ cents per share. Additional information: Class A shares have voting rights but no right to a fixed dividend. Class B shares have no voting rights but have a right to fixed, cumulative dividend distribution. During the $2024$ financial year, Hills made a profit of R$570890.$ Ignore VAT and dividends tax. REQUIRED: $1\mathrm{.}1$ Prepare the general ledger accounts as at $31$ December $2024$ for Hills Investors $($Pty$)$ Ltd for the following accounts: $1\mathrm{.}1\mathrm{.}1$ Application for allotment $-$ Class A and Class B $(15$ marks$)1\mathrm{.}1\mathrm{.}2$ Dividends $(5$ marks$)$ Dates are required. Close off of the account is required. $(20$ marks$)1\mathrm{.}2$ Prepare the extract of the Statement of Financial Position of Hills Investors $($Pty$)$ Ltd for the year ended $31$ December $2024,$ showing only the Equity. $(10$ marks$)---$ End of Question $1---$ QUESTION $2(55$ marks$)$ Fair Screen $($Pty$)$ Ltd $($Fair Screen$)$ manufactures small components used in the manufacture of computer screens. Fair Screen has a $31$ October financial year$-$end. You are provided with the Statement of Financial Position as well as extracts from the Statement of Profit or Loss and Other Comprehensive Income of Fair Screen $($Pty$)$ Ltd for the financial year ended $31$ October $2024.$ Statement of Financial Position of Fair Screen $($Pty$)$ Ltd as at $31$ October $202420242023$ R R ASSETS Machinery $195000120000$ Land $590000500000$ Investments $-$ Shares $12000045000$ Non$-$current assets $905000665000$ Inventory $2850034500$ Trade receivables $12300062000$ Cash and cash equivalents $28181074000$ Current assets $433310170500$ Total assets $1338310835500$ EQUITY AND LIABILITIES Equity attributable to owners $850280533750$ Share capital $250000150000$ Revaluation reserve: Land $900000$ Retained earnings $510280383750$ Total equity $850280533750$ Long$-$term loan: $11\mathrm{.}25\%$ p$.$a$.300000150000$ Non$-$current liabilities $300000150000$ Trade payables $145250121500$ Dividends payable $2700010000$ SARS $($income tax payable$)1578020250$ Current Liabilities $188030151750$ Total liabilities $488030301750$ Total equity and liabilities $1338310835500$ Extract from the Statement of Profit or Loss and Other Comprehensive Income of Fair Screen $($Pty$)$ Ltd for the year ended $31$ October $2024$ R Profit before tax $233260$ Income tax expense $(62980)$ Profit for the year $170280$ All information below has already been correctly accounted for: Note $1$: Machinery During the current financial year, the following transactions occurred which affected Machinery: New machinery to the value of R$155000$ was purchased in cash to replace the old, outdated machine. The old machine was sold for cash. At the time of sale, the carrying value of the old machine amounted to R$50000,$ and an accounting loss on sale of R$14000$ was incurred. There were no other additions, disposals or impairments to machinery items that occurred during the financial year. Note $2$: Land Land was revalued for the first time by an independent valuator. There were no additions, disposals or impairments to Land items that occurred during the financial year. Note $3$: Loan On $1$ July $2024,$ the long$-$term loan was increased due to the rapid growth of the company. Note $4$: Finance Cost The following finance cost transactions occurred during the year which all were paid in cash: Interest on loan. Interest on trade payables for the year totalled R$122.$ Note $5$: Share Investment During the $2024$ financial year, Fair Screen purchased additional share investments at a cost of R$85000.$ Certain investments were also sold during the current financial year which resulted in a profit of R$1500$ on the sale. Fair Screen received dividends from these investments of R$13200$ for the year. All transactions relating to investments including the receipt of dividends, were done in cash. Note $6$: Trade receivables During the year, R$8900$ worth of trade receivables were written off as irrecoverable. Note $7$: Dividends At year$-$end, Fair Screen decided to declare dividends of R$1\mathrm{.}75$ per share. At the time of the divided declaration, there were $25000$ issued shares. REQUIRED: Prepare the Statement of Cash Flows of Fair Screen $($Pty$)$ Ltd for the financial year ended $31$ October $2024,$ using the indirect method. Ignore VAT and dividends tax. Show all workings, and reference accordingly. Always round up to the nearest rand where applicable. $(55$ marks$)---$ End of Question $2---$ QUESTION $3(15$ marks$)$ Elsie Wines $($Pty$)$ Ltd $($Elsie Wines$)$ is a wine farm in South Africa. Elsie Wines has a $30$ November financial year$-$end. You are provided with the following information about Elsie Wines for the year ended $30$ November $2024$: At the beginning of the year, the company had a share capital of R$100000$ Class A shares and a retained earnings balance of R$55000.$ During the year, the company issued additional Class A shares for R$20000$ and new Class B shares for R$60000.$ The company had a net profit of R$45780$ for the year. The directors declared a dividend of R$15250$ during the year. The owner of the company took wines for personal use at a cost price of R$5950$ from the company. Elsie Wines had an opening balance of revaluation surplus of R$65000$ on $1$ December $2023.$ During the year, the company revalued its land resulting in a revaluation loss of R$15000.$ The company did not dispose of any of its assets during the year. This was the only revaluation that took place during the year. REQUIRED: Prepare the Statement of Change in Equity of Elsie Wines $($Pty$)$ Ltd for the year ended $30$ November $2024.$ Include all necessary headings and sub$-$headings in your statement. Provide workings where necessary. Total columns are not necessary. Ignore taxation. $(15$ marks$)---$ End of Question $3---------$ END OF PAPER $------$

Answer & Explanation Solved by verified expert

See Answer