Question
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$5 each
On 29 February 2020 the following balances, amongst others, appeared in the books of the company:
| N$ |
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:
- The gross profit % is 50% on cost price.
- Depreciation must be written off as follows:
Furniture and equipment 10% per annum on carrying value.
Vehicles 20% per annum on cost price
- Debtors to the amount of N$180 must be written off as irrecoverable
- Allowance must be made for credit losses at 10% of debtors.
- 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.
- 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.
- Land is held as security for the debentures.
- Included in administrative costs are directors fees of N$2 500 and auditors fees of N$1 000.
- N$3 000 must be transferred to the General Reserve.
- The income tax for the year is calculated at N$16 316.
- The debentures are redeemable on 28 February 2024.
REQUIRED:
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- Prepare a statement of profit or loss and other comprehensive income for the year ended on 29 February 2020 (15 marks)
- Prepare the Statement of Financial Position of the company as on 29 February 2020. The financial statements must comply with the explicit requirements of the Companies Act 28 of 2004. (25 marks)
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