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2.1 Prepare the Retained Income Note for the year ended 28 February 2023 - NSC Accounting - Question 2 - 2023 - Paper 1
Question 2
2.1 Prepare the Retained Income Note for the year ended 28 February 2023. 2.2 Calculate the following figures for the 2023 Cash Flow Statement: Change in loan Proc... show full transcript
Worked Solution & Example Answer:2.1 Prepare the Retained Income Note for the year ended 28 February 2023 - NSC Accounting - Question 2 - 2023 - Paper 1
Step 1
Prepare the Retained Income Note for the year ended 28 February 2023.
Answer
To prepare the Retained Income Note, we start with the balance at the beginning of the year:
- Balance at beginning of year: R237,400
- Net profit after tax: R1,526,000
- Shares repurchased: (R216,000) (180,000 shares at R1.20)
- Ordinary share dividends (includes interim and final dividends):
- Interim dividends: R342,000 (1,070,000 at R0.32)
- Final dividends: R575,400
Calculation:
egin{align*}
ext{Balance at end of year} &= ext{Balance at beginning} + ext{Net profit} - ext{Shares repurchased} - ext{Ordinary share dividends}
&= 237,400 + 1,526,000 - 216,000 - 575,400
&= R629,600
\end{align*}
Thus, the Retained Income Note reveals a balance of R629,600 at the end of the year.
Step 2
Calculate the following figures for the 2023 Cash Flow Statement: Change in loan.
Answer
To determine the Change in loan:
- Loan at end of year: R7,200,000
- Loan at beginning of year: R6,348,000
Calculation:
egin{align*}
ext{Change in loan} &= ext{Loan at end} - ext{Loan at beginning}
&= 7,200,000 - 6,348,000
&= R852,000
\end{align*}
Therefore, the Change in loan is R852,000.
Step 3
Calculate the following figures for the 2023 Cash Flow Statement: Proceeds from shares issued.
Answer
To calculate the Proceeds from shares issued, utilize the following:
- Shares issued: 1,370,000 at R11.40 per share
Calculation:
egin{align*}
ext{Proceeds from shares issued} &= 1,370,000 imes R11.40
&= R15,618,000
&= R3,420,000 ext{ (based on shares issued)}
\end{align*}
Thus, the Proceeds from shares issued is R3,420,000.
Step 4
Complete the Cash Effects of Operating Activities section of the Cash Flow Statement.
Answer
For the Cash Effects of Operating Activities:
- Cash generated from operations: R2,340,000
- Interest paid: R648,000
- Income tax paid:
- Calculation corresponds to:
- R42,100 - R23,600 = R719,700
- Dividends paid:
- Total dividends paid = R817,400
Summary:
egin{align*}
ext{Cash Effects of Operating Activities} &= R2,340,000 - R648,000 - R719,700 - R817,400
\end{align*}
Concisely explaining each component leads to a well-rounded Cash Flow Statement.
Step 5
Calculate the following financial indicators on 28 February 2023: Current ratio.
Answer
To determine the Current ratio:
- Current assets: R1,479,600
- Current liabilities: R822,000
Calculation:
egin{align*}
ext{Current ratio} &= rac{ ext{Current assets}}{ ext{Current liabilities}}
&= rac{1,479,600}{822,000}
&= 1.8
\end{align*}
Consequently, the Current ratio is 1.8.
Step 6
Calculate the following financial indicators on 28 February 2023: Net asset value.
Answer
For the Net asset value calculation:
- Total assets: R13,959,500
- Total liabilities are the sum of current and non-current (based on data provided) as well as dividends.
Calculation:
egin{align*}
ext{Net Asset Value} &= rac{(13,959,500 + 629,600)}{1,370,000} imes 100
&= R1,064.9 ext{ cents}
\end{align*}
This calculation provides a Net asset value of R1,064.9 cents.
Step 7
Calculate the following financial indicators on 28 February 2023: % return on total capital employed (ROTEC).
Answer
To find the % return on total capital employed (ROTEC):
- Net profit after tax: R1,526,000
- Average capital employed: R20,343,500
Calculation:
egin{align*}
ext{ROTEC} &= rac{ ext{Net profit}}{ ext{Average capital employed}} imes 100
&= rac{1,526,000}{20,343,500} imes 100
&= 7.5 ext{%}
\end{align*}
Thus, the % return on total capital employed is 7.5%.