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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
Prepare the Retained Income Note on 28 February 2022.
Answer
Retained Income Note on 28 February 2022
- Balance on 1 March 2021: R516,000
- Net profit after tax: R168,000
- Shares repurchased: 120,000 shares at R1.40 = R168,000
- Ordinary share dividends: R873,000 (operation)
- Interim dividends: R70,400
- Final dividends: R163,200
Balance on 28 February 2022: Calculated as follows:
R516,000
- R168,000 (Net profit after tax)
- R873,000 (Ordinary share dividends)
- R70,400 (Interim dividends)
- R163,200 (Final dividends)
Total: R382,800
Step 2
Calculate the following amounts for the Cash Flow Statement: - Income tax paid
Answer
To calculate the income tax paid, we consider total profits and adjustments:
Income Tax Paid Calculation:
Total Profit = R389,300
Adjustments:
- Tax charge = R21,300
- Less: tax saved = R14,400
Thus, Income Tax Paid = R389,300 - R21,300 - R14,400 = R353,600
Step 3
Calculate the following amounts for the Cash Flow Statement: - Funds used to repurchase shares
Answer
The funds used to repurchase shares can be calculated as:
Funds Used to Repurchase Shares Calculation:
- Total shares repurchased = 120,000 shares
- Price per share = R10.20
Funds used = 120,000 shares * R10.20 = R1,224,000
Step 4
Calculate the following amounts for the Cash Flow Statement: - Net change in cash and cash equivalents
Answer
Net change in cash and cash equivalents can be identified as:
Net Change Calculation:
- Cash at beginning = R44,700
- Cash inflow = R133,000
- Cash outflow = R8,000
Net Change = R44,700 + R133,000 - R8,000 = R169,700
Step 5
Step 6
Calculate the following financial indicators on 28 February 2022: - % return on average capital employed
Answer
To calculate the % return on average capital employed:
Return on Average Capital Calculation:
- Net profit before tax: R1,297,000
- Average capital employed: R1,679,700
Return = ( \frac{1,297,000}{1,679,700} \times 100 % = 11.39% )
Step 7
Calculate the following financial indicators on 28 February 2022: - Dividends per share
Answer
Dividends per share can be computed as:
Dividends per Share Calculation:
- Total dividends (Interim + Final) = R710,400
- Total shares outstanding = 1,800,000
Dividends per share = ( \frac{710,400}{1,800,000} \times 100 = 60c )