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Dempsey Ltd was incorporated on 01 March 2018 with an authorised share capital of N$500 000 which consist of: 2 000 000 ordinary no par

Dempsey Ltd was incorporated on 01 March 2018 with an authorised share capital of N$500 000 which consist of:

2 000 000 ordinary no par value shares.

100 000 6% convertible no par value preference shares.

20 000 8% cumulative preference shares of N$5 each

On 29 February 2020 the following balances, amongst others, appeared in the books of the company:

Share Capital: Ordinary shares (80 000 shares) 80 000

6% Preference shares (20 000 shares) 40 000

8% Cumulative preference shares 25 000

Fixed Investment in shares (Market value N$60 000) 53 560

General administrative costs 11 000

Credit losses 5 700

Bank (dr) 24 480

5% Debentures 30 000

Land at cost price 110 530

Furniture and Equipment at cost price 3 040

Vehicles at cost price 5 870

Creditors 36 340

Debtors 40 180

Retained income (01 March 2019) - $9 510

Debenture interest (paid up to 01 September 2019) - $750

Share premium 1 250

Accumulated depreciation – 01 March 2019:

-Furniture and Equipment 440

-Vehicles 2 610

Delivery costs ( to customers) 4 900

Allowance for credit loss 5 823

Gross profit 74 787

Provisional tax payments to NamRa - $18 000

Traffic fines - $2 750

Inventory (29 February 2020) -$ 27 000

Investment income (dividends on listed shares) - $2 000

Additional information:

1. The gross profit % is 50% on cost price.

2. Depreciation must be written off as follows: Furniture and equipment – 10% per annum on carrying value. Vehicles – 20% per annum on cost price

3. Debtors to the amount of N$180 must be written off as irrecoverable

4. Allowance must be made for credit losses at 10% of debtors.

5. The following share transactions took place during the year and due to the inexperience of the accountant, no entry has yet been made.

5 000 (8%) cumulative preference shares were issued at N$6 each on 01 July 2019 ;

6 000 (6%) convertible preference shares were converted to ordinary shares on 01 January 2020 at the conversion price of N$2 per share.

These movements in share capital is the first to occur since incorporation of the company.

6. A final dividend of N$40 814 was declared on 02 January 2020 but was still not paid on 29 February 2020. This dividend is the first dividend to ever be declared to the company.

7. Land is held as security for the debentures.

8. Included in administrative costs are directors fees of N$2 500 and auditors fees of N$1 000.

9. N$3 000 must be transferred to the General Reserve.

10.The income tax for the year is calculated at N$16 316.

11.The debentures are redeemable on 28 February 2024.

REQUIRED:

1. Prepare a statement of profit or loss and other comprehensive income for the year ended on 29 February 2020

2. Prepare the Statement of Financial Position of the company as on 29 February 2020.


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