AFE3691 Question 1 (32 Marks) The following information was taken from the accounting records of Lilian Ltd. and is presented to you Authorized share capital 800 000 ordinary shares of NS 1 each 500 000 preference shares of no par value (fixed annual dividend of 15c per share) Balances on 01 October 20.9 Ordinary share capital Preference share capital Redeemable preference share capital Share premium Retained earnin Revaluation reserve Asset replacement reserve Land The shares were issued as follows 360 000.00 5 000.00 400 000.00 288 000.00 95 000.00 42 000.00 20 000.00 810 000.00 On 30 November 20.8, 360 000 ordinary shares were issued as NS 1, 80 each and 200 000 redeemable preference shares were issued at N$ 2, 00 each. The redemption date has been established on the date the shares were issued. The preference shares were issued during January 20.7 at a price of N$ 1, 50 per share. Additional information a) It was decided to convert the par value shares on 01 October 20.9 to be in line with the companies incorporated under the Companies Act 71 of 2008. b) On 01 July 20.10, 150 000 ordinary shares were offered to the public at N$ 2,00 each and 200 000 preference shares at N$ 2, 80 each. On the closing date of the applications on 31 July 20.10, applications for 160 000 ordinary shares and 180 000 preference shares were received. The maximum amount of shares was allotted and the unsuccessful applicants were refunded. The following were provisional income tax payments, during the year, for the year ended 30 September 20.10 c) .First payment N$ 75, 000.00 Page 13 of 18 Second payment N$ 90, 000.00 d) The profit before tax for the year ending 30 September 20.10 amounts to N$ 700 000.00. Provision needs to be made for income tax at a rate of 28% for companies. Assume that the accounting profit before tax was the same as taxable income e) 125 000 redeemable preference shares were redeemed on 30 September 20.10 at NS 2, 00.00 each. This was partly financed by issuing 70 000 preference shares on 30 September 20.10 at N$2, 40 each. The remainder of the redeemable preference shares will be redeemed on 30 September 20.13 f) On September 20.10, the directors decided to declare a divided of 20c per ordinary share to all shareholders that were in possession of shares on that date. The directors also decided to increase the asset replacement reserve with NS 15 000.00. g) Land was revalued by a sworn appraiser at NS 850, 000.00 You are required to: 1.1 Prepare the general journal of Lilian Ltd for points a, b and f above. (10 Marks) 1.2 Prepare the following accounts in the general ledger of Lilian Ltd for the year ended 30 September 2010 1.2.1 Retained earnings account (4 Marks) 1.2.2 Income tax account (4 Marks) 12.3 Define taxable income (2 Marks) 1.3 Prepare the statement of changes in equity of Lilian Ltd for the year ended 30 September 20.10 in accordance with the Companies Act 28 of 2004 and IFRS. (12 Marks) AFE3691 Question 1 (32 Marks) The following information was taken from the accounting records of Lilian Ltd. and is presented to you Authorized share capital 800 000 ordinary shares of NS 1 each 500 000 preference shares of no par value (fixed annual dividend of 15c per share) Balances on 01 October 20.9 Ordinary share capital Preference share capital Redeemable preference share capital Share premium Retained earnin Revaluation reserve Asset replacement reserve Land The shares were issued as follows 360 000.00 5 000.00 400 000.00 288 000.00 95 000.00 42 000.00 20 000.00 810 000.00 On 30 November 20.8, 360 000 ordinary shares were issued as NS 1, 80 each and 200 000 redeemable preference shares were issued at N$ 2, 00 each. The redemption date has been established on the date the shares were issued. The preference shares were issued during January 20.7 at a price of N$ 1, 50 per share. Additional information a) It was decided to convert the par value shares on 01 October 20.9 to be in line with the companies incorporated under the Companies Act 71 of 2008. b) On 01 July 20.10, 150 000 ordinary shares were offered to the public at N$ 2,00 each and 200 000 preference shares at N$ 2, 80 each. On the closing date of the applications on 31 July 20.10, applications for 160 000 ordinary shares and 180 000 preference shares were received. The maximum amount of shares was allotted and the unsuccessful applicants were refunded. The following were provisional income tax payments, during the year, for the year ended 30 September 20.10 c) .First payment N$ 75, 000.00 Page 13 of 18 Second payment N$ 90, 000.00 d) The profit before tax for the year ending 30 September 20.10 amounts to N$ 700 000.00. Provision needs to be made for income tax at a rate of 28% for companies. Assume that the accounting profit before tax was the same as taxable income e) 125 000 redeemable preference shares were redeemed on 30 September 20.10 at NS 2, 00.00 each. This was partly financed by issuing 70 000 preference shares on 30 September 20.10 at N$2, 40 each. The remainder of the redeemable preference shares will be redeemed on 30 September 20.13 f) On September 20.10, the directors decided to declare a divided of 20c per ordinary share to all shareholders that were in possession of shares on that date. The directors also decided to increase the asset replacement reserve with NS 15 000.00. g) Land was revalued by a sworn appraiser at NS 850, 000.00 You are required to: 1.1 Prepare the general journal of Lilian Ltd for points a, b and f above. (10 Marks) 1.2 Prepare the following accounts in the general ledger of Lilian Ltd for the year ended 30 September 2010 1.2.1 Retained earnings account (4 Marks) 1.2.2 Income tax account (4 Marks) 12.3 Define taxable income (2 Marks) 1.3 Prepare the statement of changes in equity of Lilian Ltd for the year ended 30 September 20.10 in accordance with the Companies Act 28 of 2004 and IFRS. (12 Marks)