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2.1 Choose the correct word from those given in brackets - NSC Accounting - Question 2 - 2022 - Paper 1
Question 2
2.1 Choose the correct word from those given in brackets. Write only the word next to the question numbers (2.1.1 to 2.1.3) in the ANSWER BOOK. 2.1.1 (Solvency/Liqu... show full transcript
Worked Solution & Example Answer:2.1 Choose the correct word from those given in brackets - NSC Accounting - Question 2 - 2022 - Paper 1
Step 1
2.2.1 Prepare the Retained Income Note on 28 February 2022.
Answer
To prepare the Retained Income Note, we start with the balance as of 1 March 2021, which is R516 000. The net profit after tax for the year must be taken into account, which is R168 000. After that, deduct the ordinary share dividends which are R870 000. Interim dividends need to be subtracted (R104 700), and final dividends (R163 200) also need to be considered. Thus, the retained income balance on 28 February 2022 can be calculated as follows:
Initial Balance: R516,000
Add: Net Profit After Tax: R168,000
Less: Ordinary Share Dividends: R873,000
Less: Interim Dividends: R104,700
Less: Final Dividends: R163,200
Final Balance Calculation:
Balance on 28 February 2022: R382,800
Step 2
2.2.2 Calculate the following amounts for the Cash Flow Statement:
Answer
- Income Tax Paid: To find the income tax paid, start with the net profit and adjust for any differences due. The income tax paid calculation is as follows:
Income before Tax: R389,300
Less: Taxable Income: R21,300
Less: Disallowed Expenses: R14,400
Tax Calculation: R353,600.
- Funds Used to Repurchase Shares: To calculate the funds used:
Funds for Repurchase: 120,000 shares at R10.20 = R1,224,000.
- Net Change in Cash and Cash Equivalents: This is calculated by taking the net cash flow from operating activities:
Net Change: R44,700 + R133,000 - R8,000 = R169,700.
Step 3
2.2.3 Calculate the following financial indicators on 28 February 2022:
Answer
- Debt-Equity Ratio: The debt-equity ratio is calculated using total liabilities divided by total equity:
Debt-Equity Ratio: [ \frac{2,886,000}{12,350,000} = 0.2 : 1 ]
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% Return on Average Capital Employed: This ratio measures the profitability and is calculated as follows: [ \text{% Return} = \left( \frac{1,297,000 + 382,000}{1,679,700} \right) \times 100 = 11.39% ]
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Dividends Per Share: This is calculated by taking the total dividends and dividing it by the number of shares: [ \frac{710,400}{1,800,000} \times 100 = 60c \text{ per share} ]