Prepare the Ordinary Share Capital Note on 28 February 2021 - NSC Accounting - Question 2 - 2021 - Paper 1

To calculate % operating expenses on sales:

• Formula: \text{% Operating Expenses} = \left(\frac{Operating \ Expenses}{Sales}\right) \times 100

• Values:

  • Operating Expenses: R1,458,600
  • Sales: R7,293,000

• Calculation: \text{% Operating Expenses} = \left(\frac{1,458,600}{7,293,000}\right) \times 100 = 20\%

To determine the Dividend per share:

• Total dividends paid:

  • Interim dividend of R162,000 and final dividend of R0.22 per share:
  • Total shares at year-end: 870,000

• Formula: $\text{Dividend per Share} = \frac{Total \ Dividends}{Total \ Shares}$

• Calculation:

  • Total Dividend= R162,000 + R191,400 = R353,400
  • $\text{Dividend per Share} = \frac{353,400}{870,000} = 0.405$ or approximately R0.40

To calculate % return on average shareholders’ equity:

• Formula: $\text{Return on Equity} = \left(\frac{Net \ Profit}{Average \ Shareholders' \ Equity}\right) \times 100$

• Values:

  • Net Profit: R985,500
  • Average Shareholders' Equity:
    • (\text{Equity at beginning} = 6,450,000 + 8,038,100 = 14,488,100 / 2)
    • Average = R7,244,050

• Calculation:

  $\text{Return on Equity} = \left(\frac{985,500}{7,244,050}\right) \times 100 = 13.6\%$

In completing the Cash Flow Statement:

1. Cash Flow from Operating Activities:

   • Cash generated from operations: R1,180,000
   • Adjustments:
     • Interest paid: R429,500
     • Taxation paid: R364,500
     • Dividends paid: R270,300

2. Cash Flow from Investing Activities:

   • Total: R1,320,000

3. Cash Flow from Financing Activities:

   • Cash from shares issued: R409,000
   • Cash from shares repurchased: R291,000
   • Loan repayment: R50,000

4. Change in Cash and Cash Equivalents:

   • Balance at the end: R193,000