Q18-1 The equity of a company could comprise the following items: a. Share capital, retained earnings, debentures b. C. Share capital, retained earnings, shareholders' loan account Revaluation surplus, retained earnings d. e. Share capital, revaluation surplus, retained earnings None of the above Q18-2 The retained earnings on the statement of financial position of a company: a. b. C. d. e. Includes the sum of all past profits (less losses) of the company plus any dividends that have been declared but not paid. Represents cash balances the company has available to pay dividends. Reduced by any share capital, equals the total shareholders' equity of the company. Will be reported as a negative amount if the sum of all prior losses plus all dividend declarations exceeds the sum of all prior profits. Will be reported as a positive amount if the profit for the current period exceeds the dividend declarations during the period. Q18-3 An extract from the trial balance of Marcus (Pty) Ltd at 30 June 20X1 is shown below. All adjusting and closing entries have been processed except those relating to taxation and dividends. MARCUS (PTY) LIMITED EXTRACT FROM TRIAL BALANCE AT 30 JUNE 20X1 Ordinary share capital (100 000 shares issued at C2 each) 15% preference share capital (15 000 shares issued at C1 each) Long-term borrowing Retained earnings (1/7/X0) Income tax expense Current tax payable: income tax Interim ordinary dividend paid Profit or loss Additional information: Dr Cr 200 000 15 000 60 000 100 000 36 500 30 000 10 000 99 000 1. The long-term borrowing was raised on 2 January 20X0 at an interest rate of 7% per annum. Interest is payable monthly in arrears and all amounts relating to the current financial year have been paid and accounted for. 2. On 29 June 20X1 the directors declared the preference dividend in respect of the year ended 30 June 20X1 and on 14 July 20X1 a final ordinary dividend of 20 cents per share was declared. The preference shareholders are all South African companies that are exempt from dividends tax, but the ordinary shareholders are liable for the dividends tax of 20%. No entries have been processed to record these transactions.