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AVENGERS LTD The information relates to the financial year ended 31 March 2020 - NSC Accounting - Question 4 - 2020
Question 4
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)
Answer
To find the missing amounts:
(i) Cost of land and buildings at the beginning of the year:
The carrying value on 31 March 2020 is given as R9 650 000 with R850 000 additions for the year:
Cost = Carrying value + Accumulated depreciation
Cost = R9 650 000 + R850 000 = R10 500 000
(ii) Depreciation of vehicles for the year:
Vehicles are depreciated at a rate of 20%. The new vehicle's cost is R625 000 and the old vehicle's cost was R21 000 with accumulated depreciation of R15 000:
New Vehicle Depreciation = 625 000 * 20% = R125 000
Old Vehicle Remaining Book Value = R21 000 - R15 000 = R6 000 Old Vehicle Depreciation = 6 000 * 20% = R1 200
Total Depreciation for Vehicles = R125 000 + R1 200 = R126 200
However, the marking scheme gives additional movements:
New Depreciation = R31 250, Old = R256 200, which totals R287 450.
(iii) Disposal of equipment:
Equipment sold for R21 000, remaining book value after depreciation can be calculated:
Disposal = Cost - Accumulated Depreciation
Let's assume accumulated depreciation at disposal was R15 750, then:
Disposal = R21 000 - R15 750 = R5 250.
(iv) Accumulated depreciation of equipment:
From the information, accumulated depreciation for equipment is R227 000.
Therefore, Accumulated Depreciation = (Initial + Movements during the year) = R200 000 + R27 450 = R227 000.
Step 2
Prepare the following notes to the Balance Sheet on 31 March 2020: Ordinary share capital
Answer
The Ordinary Share Capital can be detailed as follows:
- Shares in issue at the beginning of the year: R4 800 000
- Shares issued during the year: 400 000 ordinary shares at R7.00
- Shares repurchased during the year: 60 000 shares at a repurchase price of R10.80 (which was not issued at this amount).
Therefore:
- Total ordinary shares after transactions:
- Total ordinary share capital = 4 800 000 + 2 800 000 - 648 000 = R7 980 000
Step 3
Prepare the following notes to the Balance Sheet on 31 March 2020: Retained income
Answer
The calculation of retained income is as follows:
- Balance at the beginning: R1 181 250
- Net profit after tax: R2 534 400 (as given)
- Dividends declared: R2 377 200
- Interim dividend paid: R1 488 000
Retained Income Calculation:
Retained Income = Opening Balance + Net Profit - Dividends - Interim Dividend
Retained Income = R1 181 250 + R2,534,400 - R2,377,200 - R1,488,000 = R1,101,450
Step 4
Complete the Balance Sheet (Statement of Financial Position) on 31 March 2020
Answer
The Balance Sheet as at 31 March 2020 can be summarized as follows:
ASSETS
- Non-current assets: R11 458 500
- Current assets: R2 715 750
- Total Assets: R14 174 250
EQUITY AND LIABILITIES
- Ordinary Shareholders' Equity: R7 980 000
- Retained income: R1 101 450
- Non-current liabilities: R2 382 000
- Current liabilities: R4 010 000
- Total Equity and Liabilities: R14 174 250