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Part 2 (32 Marks) These balances were extracted from the books of Tembo Ltd as at 31 January 2018: Additional information: On 28 February 2018

Part 2 (32 Marks) These balances were extracted from the books of Tembo Ltd as at 31 January 2018: Additional information: On 28 February 2018 Tembo Ltd issued 877 000 ordinary shares and applications worth N$ 60 000.00 were returned due to an oversubscription. Underwriting commission was not accrued in the in the previous final year and the underwriter was paid a commission of 2 %. Tembos accounting policy with respect to share issue costs is to minimize distributable reserves. The final dividend was paid on 03 February 2019. Tembo Ltd had issued 15 000, N$ 3, 6% cumulative preference shares on the 01 February 2016. Preference shares have never been issued at a premium and in case of preference shares declared they are then paid on 01 February. Furthermore, Tembo Ltd declared and paid an ordinary interim dividend of 7 cents per share on 15 February 2018 and declared a final dividend of N$ 0.05c per share on 30 January 2019. The first dividend ever to be paid by Tembo Ltd was the N$ 30 000.00 ordinary dividend of the prior year. The simple interest payable on the outstanding balance of the long term loan bears at 8.5%. The interest is payable annually on 28 February and the two capital repayments of N$ Debit Credit Retained earnings (31 January 2018) 12,994,000.00 Interest payable 175,312.50 Long term loan 2,250,000.00 Application and allotment 2,691,000.00 Shareholders for ordinary dividends 30,000.00 Stated share capital ( 2 000 000 ordinary shares) 4,000,000.00 Preference share capital and shareholders for preference dividends are not known Page 18 of 18 350 000 and N$ 400 000.00 were made on 31 June 2018 and 31 December respectively. The net profit in the statement of profit or loss and comprehensive income is N$ 3 827 000.00 for the year ended 31 January 2019. This is before any of the information above has been taken into account. You are required to: 1. Calculate the price at which each ordinary share was issued in the current year ( 4 Marks) 2. Prepare all journal entries relating to the share issue, to be processed in 2019 financial year. ( 4 Marks ) 3. What does the accounting policy say on distributable reserves with relation to the underwriter commission? ( 3 Marks) 4. Calculate the dividends paid to ordinary shareholders during the year ended 31 January 2019. ( 4 Marks) 5. Calculate the dividends paid to preference shareholders during the year ended 31 January 2019. ( 4 Marks) 6. Calculate the Final net profit. ( 4 Marks) 7. Calculate the closing retained earnings. (6 Marks) 8. How would you determine the total asset value of Tembo Ltd? ( 3 Marks)

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