Question
Asparagus (Pty) Ltd had the following opening balances (01.03.2016) in their trial balance for the year ending 28 February 2017: Class A share capital (300
Asparagus (Pty) Ltd had the following opening balances (01.03.2016) in their trial balance for the year ending 28 February 2017:
Class A share capital (300 000 shares) R600 000 1
2% Class B share capital (20 000 shares) R100 000
Retained Earnings R678 000
Total R1 378 000
Authorised share capital of Asparagus consisted of:
500 000 Class A shares (with voting rights)
200 000 Class B shares (without voting rights, non-cumulative, non-redeemable) entitled to fixed dividends of 12% of R5 per share.
During the year the following was approved by the directors:
a) A capitalisation issue of 100 000 Class A shares (with voting rights) at R2.50 each was to take place on 1 May 2016. The capitalisation issue occurred on 1 May 2016.
b) The directors announced a rights offer to existing Class A shareholders on 1 September 2016, whereby existing shareholders could purchase 1 Class A share for every 4 Class A shares (with voting rights) held at R3 each. 85% of shareholders had exercised their rights by 1 October 2016, the closing date for applications. Share issue costs of R18 000 were incurred, which included the underwriters commission of 4%.
c) Profit for the year amounted to R350 000 and a Class A dividend of 10c per share was declared and paid on 28 February 2017.
Required: Show how the above transactions will be reflected in the:
Statement of changes in equity of Asparagus (Pty) Ltd for the year ended 28 February 2017. (12 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started