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Prepare the following notes to the Balance Sheet: • Ordinary Share Capital • Retained Income Complete the Balance Sheet on 30 April 2016 - NSC Accounting - Question 4 - 2016 - Paper 1
Question 4
Prepare the following notes to the Balance Sheet: • Ordinary Share Capital • Retained Income Complete the Balance Sheet on 30 April 2016. Where notes are not requ... show full transcript
Worked Solution & Example Answer:Prepare the following notes to the Balance Sheet: • Ordinary Share Capital • Retained Income Complete the Balance Sheet on 30 April 2016 - NSC Accounting - Question 4 - 2016 - Paper 1
Step 1
Ordinary Share Capital
Answer
To calculate the Ordinary Share Capital for Barone Ltd, we need to evaluate the shares issued and any repurchases.
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Shares Issued:
- Initial shares issued: 650,000 shares at R6.45 each = R4,192,500.
- Additional shares issued: 150,000 shares at R6.45 each = R967,500.
- Total shares issued = 650,000 + 150,000 = 800,000 shares.
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Repurchased Shares:
- Shares repurchased = 750,000 shares for R525,000.
- Shares still outstanding: 800,000 - 75,000 = 725,000 shares.
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Total Ordinary Share Capital Calculation:
- Ordinary Share Capital = Issued shares at R6.45 each = 800,000 shares * R6.45 = R5,160,000.
Step 2
Retained Income
Answer
To prepare the Retained Income for Barone Ltd, follow these calculations:
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Net Profit for the Year:
- Net profit (before tax) = R1,228,000
- Income tax = R368,400
- Net profit after tax = R1,228,000 - R368,400 = R859,600
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Dividends Distribution:
- Interim dividends paid = R0.35 per share for 725,000 shares = R253,750.
- Final dividend declared = R0.25 per share for 725,000 shares = R181,250.
- Total dividends = R253,750 + R181,250 = R435,000.
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Calculate Retained Income:
- Retained Income = Previous Retained Income + Net Profit after Tax - Total Dividends.
- Previous Retained Income (assumed) = R0, hence Retained Income = R0 + R859,600 - R435,000 = R424,600.
Step 3
Complete the Balance Sheet on 30 April 2016
Answer
To complete the Balance Sheet:
Assets:
- Non-Current Assets:
- Fixed Assets = R4,042,000
- Loan to BXT Bank = R72,000
Total Non-Current Assets = R4,114,000 Current Assets:
- Trading Stock = R361,000
- Debtors Control = R411,680
- Cash and Cash Equivalents = R1,832,600
Total Current Assets = R2,605,280
Total Assets = R4,114,000 + R2,605,280 = R6,719,280
Equity and Liabilities:
- Ordinary Share Capital = R5,160,000
- Retained Income = R424,600
Total Equity = R5,160,000 + R424,600 = R5,584,600
Current Liabilities:
- Trade and Other Payables = R731,400
- Outstanding portion of Loan = R420,000
Total Liabilities = R731,400 + R420,000 = R1,151,400
Total Equity and Liabilities = R5,584,600 + R1,151,400 = R6,736,000