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Prepare the Ordinary Share Capital Note on 28 February 2021 - NSC Accounting - Question 2 - 2021 - Paper 1
Question 2
Prepare the Ordinary Share Capital Note on 28 February 2021. **Information:** 800,000 ordinary shares at the beginning. 100,000 new shares issued. 30,000 shar... show full transcript
Worked Solution & Example Answer:Prepare the Ordinary Share Capital Note on 28 February 2021 - NSC Accounting - Question 2 - 2021 - Paper 1
Step 1
Prepare the Ordinary Share Capital Note on 28 February 2021
Answer
The Ordinary Share Capital Note on 28 February 2021 is calculated as follows:
- Ordinary shares at the beginning: 800,000
- New shares issued: 100,000
- Shares repurchased: 30,000 at R8.50, resulting in R255,000 reduction
- Shares at the end of the year: 870,000
Using the share capital information, we find:
- Ordinary share capital: 6,400,000 (800,000 × 8)
- New shares issued: 1,250,000 (100,000 × 12.50)
- Total ordinary share capital calculated: 7,395,000.
Step 2
Step 3
Step 4
Calculate the following financial indicators on 28 February 2021: % return on average shareholders’ equity
Answer
The % return on average shareholders' equity is calculated as follows:
ext{% return} = rac{Net ext{ profit after tax}}{Average ext{ shareholders’ equity}} imes 100
Given:
- Net profit after tax: 985,500
- Average shareholders’ equity: 6,450,000 + 8,038,100 / 2
Calculating average equity:
Average = rac{(6,450,000 + 8,038,100)}{2} = 7,744,050
Thus:
Step 5
Complete the Cash Flow Statement for the year ended 28 February 2021
Answer
The Cash Flow Statement can be completed with the following sections:
- Cash generated from operations: 1,180,000
- Interest paid: (429,500)
- Taxation paid: (291,000)
- Dividends paid: (277,300)
Total cash flow from operating activities results in net cash positions, while the investing and financing activities should be included accordingly.