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Prepare the Ordinary Share Capital Note on 28 February 2021 - NSC Accounting - Question 2 - 2021 - Paper 1
Question 2
Prepare the Ordinary Share Capital Note on 28 February 2021. 1 March 2020 800 000 in issue 30 June 2020 100 000 new shares issued 1 January 2021 30 000 shares repur... show full transcript
Worked Solution & Example Answer:Prepare the Ordinary Share Capital Note on 28 February 2021 - NSC Accounting - Question 2 - 2021 - Paper 1
Step 1
Prepare the Ordinary Share Capital Note on 28 February 2021
Answer
The Ordinary Share Capital Note can be prepared as follows:
- Ordinary shares at the beginning:
- 1 March 2020: 800,000 shares @ R8.00 = R6,400,000
- New shares issued:
- 30 June 2020: 100,000 shares @ R12.50 = R1,250,000
- Repurchased shares:
- 30 December 2020: 30,000 shares @ R8.50 = -R255,000
- Total shares at the end of the year:
- 870,000 shares
Thus, the total Ordinary Share Capital Note on 28 February 2021 amounts to R7,395,000.
Step 2
Calculate the following financial indicators on 28 February 2021: % operating expenses on sales
Answer
To calculate the % operating expenses on sales:
- Formula: ( \frac{\text{Operating Expenses}}{\text{Sales}} \times 100 )
- Values:
- Operating expenses: R1,458,600
- Sales: R7,293,000
- Calculation: [ \frac{1,458,600}{7,293,000} \times 100 \approx 20% ]
So, the % operating expenses on sales is approximately 20%.
Step 3
Calculate the following financial indicators on 28 February 2021: Dividend per share
Answer
To calculate the Dividend per share:
-
Total dividends paid:
- Interim dividend: R162,000
- Final dividend: 22 cents per share for total of 870,000 shares = R191,400
-
Total dividend: R162,000 + R191,400 = R353,400
-
Dividend per share: [ \frac{353,400}{870,000} \approx 0.405 \approx 40 \text{ cents} ]
Thus, the Dividend per share is approximately 40 cents.
Step 4
Calculate the following financial indicators on 28 February 2021: % return on average shareholders' equity
Answer
To calculate the % return on average shareholders' equity:
-
Average shareholders' equity:
- Beginning equity: R6,450,000 + R8,038,000 = R14,488,000
-
Net Profit after tax: R985,500
-
Formula: ( \frac{Net Profit}{\text{Average Equity}} \times 100 )
-
Calculation: [ \frac{985,500}{14,488,000} \times 100 \approx 6.81% ]
Thus, the % return on average shareholders' equity is approximately 6.81%.
Step 5
Complete the Cash Flow Statement for the year ended 28 February 2021
Answer
The Cash Flow Statement would include:
-
Cash Flow from Operating Activities: R1,180,000
-
Interest paid: -R429,500
-
Taxation paid: -R291,000
-
Dividends paid: -R277,300
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Net Change in Cash and Cash Equivalents: Calculate the total from all activities to determine the cash flow for the year.