Question 1 Dube is a transport and logistics company based in Midrand, South Africa.

They have declared an ordinary dividend of R120 000.

Their profits for the current year are R1.95 per share, and the share sells for R18.

The company is also considering offering a rights issue to its shareholders 1 share for every 4 shares held at an issue price of R15.

All the shareholders had accepted the offer by the last day of the offer.

Their summarised balance sheet prior to the dividend payment is as follows (all figures in ZAR)

Equity R800 000

Debt R200 000

Tangible assets R600 000

Inventories R5 000

Receivables R275 000

Bank/cash R120 000

Required:

1.1. Calculate the number of shares in issue (2)

1.2. Calculate the dividends per share. (2)

1.3. Calculate: the new share price, the EPS and the price-earnings ratio (3)

1.4. If the company proceeds to issue a rights issue, prepare the appropriate journals for the rights issue (3)

1.5 Disclose the rights issue in the Statement of Changes in Equity (5)