QUESTION 1 WILDE BOOKS LIMITED 26 marks Wilde Books Ltd is a distributor of books in South Africa. Mr La Clos holds 55% of the ordinary shares in Wilde Books. The remaining 45% is held by the public after the company recruited another 80 shareholders a number of years ago. Wilde Books has 45 public debenture holders, but there are nopreference shares in issue. Wilde Books' turnover for 2011 was R107.5 million and the company maintains a gross profit margin of 30%.60% of sales and 65% of purchases are on credit. The following Statement of Financial Position on 31 December 2011 and 2010 is available: Notes and additional information: 1. Inventory turnover for 2011 is 10 times per year and was calculated using average inventory. 2. Wilde Books' credit policy is very strict: debtors must pay within 30 days. No discounts are offered for early settlement. 3. Cash and cash equivalents in 2011 represent the petty cash at the various branches. 4. Wilde Books declared no dividends in 2011. 5. Wilde Books' suppliers offer terms of 2/30 net 45 . Suppliers charge interest after 60 days. 6. The bank charges interest at 11% per year on Wilde Books' overdraft which has a limit of R5 million. 7. Current assets consist of a 60% fluctuating and a 40% permanent part. 8. Assume 360 days in a year. 9. Ignore all taxes