2.1 Prepare the Retained Income Note for the year ended 28 February 2023 - NSC Accounting - Question 2 - 2023 - Paper 1

To find the change in loan for the year, we subtract the previous year's loan balance from the current balance:

• Loan at beginning (2022): R6,348,000
• Loan at end (2023): R7,200,000

So, the Change in Loan:

$ext{Change in Loan} = 7,200,000 - 6,348,000 = 852,000$

To calculate the proceeds from shares issued, we find the total proceeds from the shares that were issued during the year:

• Shares issued: R1,370,000
• Shares repurchased: R250,000

Thus, the calculation is as follows:

• Proceeds from shares issued = R1,370,000 - R250,000 = R1,120,000

Alternatively, using R11.40 per share for the issued shares, we can calculate:

• Proceeds = 300,000 shares * R11.40 = R3,420,000

In the Cash Effects of Operating Activities section, we calculate:

• Cash generated from operations: R2,340,000
• Interest paid: R648,000
• Income tax paid: R23,600
• Dividends paid: R817,400

The overall cash flow from operating activities is thus structured:

1. Cash generated from operations: + R2,340,000
2. Interest paid: - R648,000
3. Income tax paid: - R23,600
4. Dividends paid: - R817,400

This section will total the net cash generated from operating activities.

To find the current ratio, we use the formula:

ext{Current Ratio} = rac{ ext{Total Current Assets}}{ ext{Total Current Liabilities}}

Given:

• Total Current Assets = R1,479,600
• Total Current Liabilities = R822,000

Substituting these values gives:

ightarrow 1.8$$

The Net Asset Value (NAV) is calculated using the formula:

ext{NAV} = rac{ ext{Total Assets} - ext{Total Liabilities}}{Total Shares Outstanding}

From the given information:

• Total Assets = R13,959,500
• Retained Income = R629,600

Calculating:

ightarrow ext{NAV per share in cents} = 1,064.9$$

The % return on total capital employed, or ROTEC, is calculated using the formula:

ext{ROTEC} = rac{ ext{Net Profit After Tax}}{ ext{Average Capital Employed}} imes 100

Given:

• Net Profit After Tax = R1,526,000
• Average Capital Employed = R20,343,500

Thus, substituting the values:

ightarrow 7.5 ext{% approximate}$$