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AVENGERS LTD The information relates to the financial year ended 31 March 2020 - NSC Accounting - Question 4 - 2020

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AVENGERS LTD The information relates to the financial year ended 31 March 2020. REQUIRED: 4.1 Refer to Information B. Calculate the missing amounts denoted by (i) ... show full transcript

Worked Solution & Example Answer:AVENGERS LTD The information relates to the financial year ended 31 March 2020 - NSC Accounting - Question 4 - 2020

Step 1

Calculate the missing amounts denoted by (i) to (iv)

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Answer

To calculate the missing amounts for the fixed asset note:

  1. (i) Cost of Land and Buildings at the beginning of the year:

    • Given the carrying value and the accumulative depreciation, the cost can be calculated as follows:

    extCost=extCarryingValue+extAccumulatedDepreciation ext{Cost} = ext{Carrying Value} + ext{Accumulated Depreciation}

    Therefore,

    • ext{Cost} = R9 650 000 + (Accumulated Depreciation)(R650 000) = R10 500 000.

  2. (ii) Depreciation of Vehicles for the Year:

    • New Vehicle Depreciation:

    =extCostimesextDepreciationRate= ext{Cost} imes ext{Depreciation Rate} = 625000 imes 20 ext{%} = R125 000

    • Old Vehicle Depreciation:

    = R21 000 imes 15 ext{%} = R3 150

    • Total:

    =R125000+R3150=R128150= R125 000 + R3 150 = R128 150

  3. (iii) Disposal of Equipment:

    • If the cost of the old equipment was R21 000, and the accumulated depreciation was R15 000, the carrying value at disposal would be:

    =extCost−extAccumulatedDepreciation= ext{Cost} - ext{Accumulated Depreciation} =R21000−R15000=R6000= R21 000 - R15 000 = R6 000

  4. (iv) Accumulated Depreciation of Equipment:

    • Given:

    =extCostimesextDepreciationRate= ext{Cost} imes ext{Depreciation Rate}

    • Thus,

    • Total Accumulated Depreciation = R21 000 + R15 000 = R36 000.

    The calculations for (i) to (iv) are now complete.

Step 2

Prepare the following note to the Balance Sheet on 31 March 2020: Ordinary share capital

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Answer

Ordinary share capital is calculated as follows:

  • Shares in issue at beginning: 800,000

  • Shares issued during the year: 400,000

  • Shares repurchased: 60,000

  • Calculation of Total shares in issue at year-end:

    800,000+400,000−60,000=1,140,000 800,000 + 400,000 - 60,000 = 1,140,000

So, the ordinary share capital is:

  • Share capital = Total shares * Average share price = R1,140,000 * R7.00 = R7,980,000.

Step 3

Prepare the following note to the Balance Sheet on 31 March 2020: Retained income

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Answer

Retained income can be determined as follows:

  1. Balance at beginning: R1,181,250

  2. Net profit after tax: R2,534,400

  3. Dividends declared: R2,377,200

  4. Interim Dividends: R1,488,000

  5. Final Balance at the end:

    =extBalanceatBeginning+extNetProfitAfterTax−extTotalDividends= ext{Balance at Beginning} + ext{Net Profit After Tax} - ext{Total Dividends}

    Therefore,

    extRetainedIncome=R1,181,250+R2,534,400−R2,377,200=R1,181,250+R157,200=R1,338,450 ext{Retained Income} = R1,181,250 + R2,534,400 - R2,377,200 = R1,181,250 + R157,200 = R1,338,450

Step 4

Complete the Balance Sheet (Statement of Financial Position) on 31 March 2020.

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Answer

The Balance Sheet on 31 March 2020 can be structured as follows:

ASSETS

  1. Non-current assets: R11,458,500
  2. Current assets:
    • Inventories: R1,303,500
    • Trade and other receivables: R881,000
    • Cash and cash equivalents: R454,000

TOTAL ASSETS: R14,174,250

EQUITY AND LIABILITIES

  1. Ordinary shareholders' equity

    • Ordinary share capital: R7,980,000
    • Retained income: R1,181,450

  2. Non-current liabilities: R2,382,000

  3. Current liabilities:

    • Trade and other payables: R1,318,000
    • Shareholders for dividends: R752,000

TOTAL EQUITY AND LIABILITIES: R14,174,250

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