QUESTION 1 (21 Marks) Joshua King is running a business which manufactures nuts and bolts which are thensold to local industrial units. The abridged accounts for 2020 and 2021 are given below: Joshua King Income Statement for the year ending 30 September 2020 and 2021 Inventory of finished goods on 01 October 2019 was N\$180 000 Joshua King Statement of Financial Position at 30 September 2020 and 2021 3. The directors took a decision to declare a dividend of 50c per share to every shareholder on the share registry as at 30 June 2020. The dividend is only payable on 12 August 2020. 4. On 31 May 2020, N\$ 50000 of the loan was repaid. 5. Profit for the year amounted to N$500000. 6. Preference share capital is part of equity. Required: 1. Prepare the statement of changes in equity for the year ended 30 June 2020 to comply with the requirements of the Companies act (Act 71 of 2008) and International Financial Reporting Standards (IFRS) (21 marks). Question 3 (20 marks) ABC Limited is a public listed company dealing with fast moving consumer goods. The authorized share capital consists of 5000000 equity shares of no par value of which 1500 000 shares had already been issued. ABC Limited Statement of profit or loss and other comprehensive income for the year ended 31 December 2020 (Abstract) The following information was communicated to you: - A new machine was purchased during the year to replace an old machine. The old machine was originally purchased for NS 12000 sold for NS 3200 . On selling date, the accumulated depreciation was N\$ 7600 . - Land and building was revalued on 1 June 2020 to N\$280 000 - Included in trade and other payables is an amount owed to Inland and Revenue: - Interest paid during the year amounted to N\$ 28000 . - Depreciation amounted to N\$21600 for the year. - Dividends were declared during the current year. Required: 1. Prepared the statement of cash flows (direct method) for Etunda Ltd for the year ended 31 December 2020 in accordance with IFRS. (28 marks) 2. Prepare the note for the reconciliation of profit before tax with cash flow from operating activities (10 marks). No comparative figures are required. Additional information: 1. Property, plant and equipment is depreciated using straight line method. The amount for depreciation is to be allocate as follows: (i) Buildings N\$ 80000 and (ii) Equipment N\$ 50000 2. The amount of dividend relates to what was declared and paid during the year. 3. The property is used for all major business operations. The buildings which costs N\$ 4000 000 on 1 March 2019 were valued on 28 February 2020 to fair value of NS 3360000 . The office block occupies 60% of the buildings and the rest is occupied by the warehouse. 4. The equipment is shared by both administrative and sales personnel to dispatch documents to third parties. Any expense related thereof should allocated equally between the administrative and sales. 5. Salaries and wages amounting to N\$ 321000 was paid to office staff and the balance to sales department staff. Sales commission relates to an amount paid to sales agents. 6. NS 7500 of the telephone expenses was incurred by the sales employees and the remaining amount by the office staff. 7. During the year the business offered 500000 shares for NS 800000 . 8. The income tax expense for the year ended 28 February 2020 is N\$ 176610. Required: 1. Prepare the statement of profit or loss and other comprehensive income for the year ended 28 February 2020 according to the function method to comply with the requirement Companies Act 71 of 2008 and IFRS. (20 marks) Question 4 (38 marks) Etunda Ltd is a retailer shop that specializes in the selling of agricultural implements. The following financial information is extracted from the financial statements of Etunda Lid. REQUIRED: 1. Calculate the following ratios to compare the financial performance from 2020 to2021 of Joshua King Ltd (comment on each ratio) 1.1 Gross profit ratio (3 marks) 1.2 Net profit ratio (3 marks) 1.3 Return on capital employed (3 marks) 1.4 Inventory turnover (times) (3 marks) 1.5 Average collection period (3 marks) 1.6 Current ratio (3 marks) 1.7 Average payment period ratio (3 marks) Round off your answers to a maximum of two decimal places. Question 2 (21 marks) The following information is available for United Ltd for the year ended 30 June 2019: Authorised share capital: 2000000 Ordinary shares of NS 2 10000008% preference shares of NS 3 The following are account balances extracted from the general ledger as at 30 June 2019 in N\$: The following transactions pertains to the current year ending 30 June 2020: 1. On 01 September 2019 the company offered 500000 ordinary shares at NS 2.50 and 200 0008% preference shares at N\$ 3 to the public. All share application money was received on 25 September 2019. On 01 October 2019 all shares were allotted to the respective applicants and share certificates issued. 2. A valuation was undertaken by Ms. Aggie Swartz, a member of the Property Valuation Association, who valued the land and buildings at N\$ 1000000 , being the current market value at 30 June 2020 . QUESTION 1 (21 Marks) Joshua King is running a business which manufactures nuts and bolts which are thensold to local industrial units. The abridged accounts for 2020 and 2021 are given below: Joshua King Income Statement for the year ending 30 September 2020 and 2021 Inventory of finished goods on 01 October 2019 was N\$180 000 Joshua King Statement of Financial Position at 30 September 2020 and 2021 3. The directors took a decision to declare a dividend of 50c per share to every shareholder on the share registry as at 30 June 2020. The dividend is only payable on 12 August 2020. 4. On 31 May 2020, N\$ 50000 of the loan was repaid. 5. Profit for the year amounted to N$500000. 6. Preference share capital is part of equity. Required: 1. Prepare the statement of changes in equity for the year ended 30 June 2020 to comply with the requirements of the Companies act (Act 71 of 2008) and International Financial Reporting Standards (IFRS) (21 marks). Question 3 (20 marks) ABC Limited is a public listed company dealing with fast moving consumer goods. The authorized share capital consists of 5000000 equity shares of no par value of which 1500 000 shares had already been issued. ABC Limited Statement of profit or loss and other comprehensive income for the year ended 31 December 2020 (Abstract) The following information was communicated to you: - A new machine was purchased during the year to replace an old machine. The old machine was originally purchased for NS 12000 sold for NS 3200 . On selling date, the accumulated depreciation was N\$ 7600 . - Land and building was revalued on 1 June 2020 to N\$280 000 - Included in trade and other payables is an amount owed to Inland and Revenue: - Interest paid during the year amounted to N\$ 28000 . - Depreciation amounted to N\$21600 for the year. - Dividends were declared during the current year. Required: 1. Prepared the statement of cash flows (direct method) for Etunda Ltd for the year ended 31 December 2020 in accordance with IFRS. (28 marks) 2. Prepare the note for the reconciliation of profit before tax with cash flow from operating activities (10 marks). No comparative figures are required. Additional information: 1. Property, plant and equipment is depreciated using straight line method. The amount for depreciation is to be allocate as follows: (i) Buildings N\$ 80000 and (ii) Equipment N\$ 50000 2. The amount of dividend relates to what was declared and paid during the year. 3. The property is used for all major business operations. The buildings which costs N\$ 4000 000 on 1 March 2019 were valued on 28 February 2020 to fair value of NS 3360000 . The office block occupies 60% of the buildings and the rest is occupied by the warehouse. 4. The equipment is shared by both administrative and sales personnel to dispatch documents to third parties. Any expense related thereof should allocated equally between the administrative and sales. 5. Salaries and wages amounting to N\$ 321000 was paid to office staff and the balance to sales department staff. Sales commission relates to an amount paid to sales agents. 6. NS 7500 of the telephone expenses was incurred by the sales employees and the remaining amount by the office staff. 7. During the year the business offered 500000 shares for NS 800000 . 8. The income tax expense for the year ended 28 February 2020 is N\$ 176610. Required: 1. Prepare the statement of profit or loss and other comprehensive income for the year ended 28 February 2020 according to the function method to comply with the requirement Companies Act 71 of 2008 and IFRS. (20 marks) Question 4 (38 marks) Etunda Ltd is a retailer shop that specializes in the selling of agricultural implements. The following financial information is extracted from the financial statements of Etunda Lid. REQUIRED: 1. Calculate the following ratios to compare the financial performance from 2020 to2021 of Joshua King Ltd (comment on each ratio) 1.1 Gross profit ratio (3 marks) 1.2 Net profit ratio (3 marks) 1.3 Return on capital employed (3 marks) 1.4 Inventory turnover (times) (3 marks) 1.5 Average collection period (3 marks) 1.6 Current ratio (3 marks) 1.7 Average payment period ratio (3 marks) Round off your answers to a maximum of two decimal places. Question 2 (21 marks) The following information is available for United Ltd for the year ended 30 June 2019: Authorised share capital: 2000000 Ordinary shares of NS 2 10000008% preference shares of NS 3 The following are account balances extracted from the general ledger as at 30 June 2019 in N\$: The following transactions pertains to the current year ending 30 June 2020: 1. On 01 September 2019 the company offered 500000 ordinary shares at NS 2.50 and 200 0008% preference shares at N\$ 3 to the public. All share application money was received on 25 September 2019. On 01 October 2019 all shares were allotted to the respective applicants and share certificates issued. 2. A valuation was undertaken by Ms. Aggie Swartz, a member of the Property Valuation Association, who valued the land and buildings at N\$ 1000000 , being the current market value at 30 June 2020