Question 3 39 marks (58,5 minutes) Yolo Ltd ('Yolo') is a company listed on the Johannesburg Security Exchange. Yolo sells affordable wireless card machines to smaller business entities making wireless card payments affordable and accessible to all businesses. Yolo has a 31 October year end. Bonolo Dlamini (Financial Manager) is in the process of preparing the financial statements for the year ended 31 October 2021 and asked for your assistance. The following extract of the post-adjustment trial balance has been provided: Account description Notes Debit Credit R R Profit before tax 1 3 325 700 Ordinary share capital (1 November 2020) 2 1 600 000 Preference share capital ? Retained earnings (1 November 2020) 16 280 000 Debentures ? Income tax payable (SARS) (1 November 2020) 5 130 000 Ordinary dividends payable (1 November 2020) 250 000 3 4 Notes . 1. Profit before tax include the following items: Depreciation related to a delivery vehicle that was disposed of. This vehicle was disposed of on 31 August 2021 for R87 000 cash. The vehicle was originally purchased for R420 000 on 30 June 2018. The unit of production method is applied for the depreciation of vehicles. It was estimated that the vehicle will travel 120 000 kms over the 6 years that Yolo intended on using it and will be able to sell it for R120 000 at the end of its useful life. The speedometer indicated a total of 106 000 kms on the date it was disposed of. Depreciation until the date of disposal has been correctly included in the profit before tax; however, Bonolo was unsure of how to calculate the profit or loss on disposal and has not yet accounted for it. Rent expense of R117 000. Yolo rents an office block in Germiston from which all operations are carried out. The rental agreement was entered into on 1 August 2020 for 3 years. On this date Yolo paid R156 000 towards the rent for the next 12 months. In terms of the agreement, the rent escalates at 10% each year. Yolo has not made any payment towards rent since the initial payment. Yolo entered into an agreement with the government to deliver 2 000 Yolo card payment machines to traffic departments across South Africa by 1 November 2021 at R850 per card machine. This is an initiative by the government to make payments more efficient at departments. The government paid R1 700 000 to Yolo on 30 September 2021 which was included in revenue. At year-end, Yolo has delivered only 500 of the card machines. 2. The opening balance on 1 November 2020 relates to a previous ordinary share issue made at R2 per share. Yolo has an authorised ordinary share capital of 1 500 000 shares. On 1 January 2021 Yolo issued 200 000 ordinary shares at R2,50 per share. The issue was underwritten by CapTech Ltd at 2% underwriting commission. 80% of the shares were issued to the public and the rest of the shares were taken up by the underwriter. Yolo declared a capitalisation issue of 1 share for every 4 ordinary shares 5 held on 1 September 2021 at a price of R1,50 per share. The capitalisation issue was funded from retained earnings. 3. Yolo issued 500 000 7% non-redeemable cumulative preference shares on 1 June 2021 at a discount of 4%. The preference shares have a par value of R9 each. The dividend was declared at year-end but not yet paid. No accounting entries have been made regarding the preference shares. 4. Yolo issued 100 000 12% debentures at R50 each (at par) on 1 November 2020. Debentures are repayable on 31 October 2025 at par. Coupon payments are made annually. No accounting entries have been made regarding the debentures. 5. Yolo paid R150 000 to SARS (South African Revenue Services) regarding current tax (income tax) during the 2021 financial year. The income tax expense (on profit for the year) has not yet been accounted for the 2021 financial year. 6. Yolo declared and authorised a final ordinary dividend of R0,60 per share on 31 October 2021. R250 000 cash was paid to ordinary shareholders on 30 November 2020 regarding ordinary dividends. Dividend tax has not yet been accounted for. Additional information: . . Ignore VAT. An income tax rate of 28% is applicable. A dividend tax rate of 20% is applicable. Round all amounts to the nearest Rand where applicable. . . Marks (10) (16) You are required to: (a) Calculate the profit after tax of Yolo Ltd for the year ended 31 October 2021. (b) Prepare the statement of changes in equity of Yolo Ltd for the year ended 31 October 2021. Comparative figures are not required. (c) Prepare only the non-current and current liability section of the Statement of Financial Position of Yolo Ltd as at 31 October 2021. The total column and comparative figures are not required. (13) Question 3 39 marks (58,5 minutes) Yolo Ltd ('Yolo') is a company listed on the Johannesburg Security Exchange. Yolo sells affordable wireless card machines to smaller business entities making wireless card payments affordable and accessible to all businesses. Yolo has a 31 October year end. Bonolo Dlamini (Financial Manager) is in the process of preparing the financial statements for the year ended 31 October 2021 and asked for your assistance. The following extract of the post-adjustment trial balance has been provided: Account description Notes Debit Credit R R Profit before tax 1 3 325 700 Ordinary share capital (1 November 2020) 2 1 600 000 Preference share capital ? Retained earnings (1 November 2020) 16 280 000 Debentures ? Income tax payable (SARS) (1 November 2020) 5 130 000 Ordinary dividends payable (1 November 2020) 250 000 3 4 Notes . 1. Profit before tax include the following items: Depreciation related to a delivery vehicle that was disposed of. This vehicle was disposed of on 31 August 2021 for R87 000 cash. The vehicle was originally purchased for R420 000 on 30 June 2018. The unit of production method is applied for the depreciation of vehicles. It was estimated that the vehicle will travel 120 000 kms over the 6 years that Yolo intended on using it and will be able to sell it for R120 000 at the end of its useful life. The speedometer indicated a total of 106 000 kms on the date it was disposed of. Depreciation until the date of disposal has been correctly included in the profit before tax; however, Bonolo was unsure of how to calculate the profit or loss on disposal and has not yet accounted for it. Rent expense of R117 000. Yolo rents an office block in Germiston from which all operations are carried out. The rental agreement was entered into on 1 August 2020 for 3 years. On this date Yolo paid R156 000 towards the rent for the next 12 months. In terms of the agreement, the rent escalates at 10% each year. Yolo has not made any payment towards rent since the initial payment. Yolo entered into an agreement with the government to deliver 2 000 Yolo card payment machines to traffic departments across South Africa by 1 November 2021 at R850 per card machine. This is an initiative by the government to make payments more efficient at departments. The government paid R1 700 000 to Yolo on 30 September 2021 which was included in revenue. At year-end, Yolo has delivered only 500 of the card machines. 2. The opening balance on 1 November 2020 relates to a previous ordinary share issue made at R2 per share. Yolo has an authorised ordinary share capital of 1 500 000 shares. On 1 January 2021 Yolo issued 200 000 ordinary shares at R2,50 per share. The issue was underwritten by CapTech Ltd at 2% underwriting commission. 80% of the shares were issued to the public and the rest of the shares were taken up by the underwriter. Yolo declared a capitalisation issue of 1 share for every 4 ordinary shares 5 held on 1 September 2021 at a price of R1,50 per share. The capitalisation issue was funded from retained earnings. 3. Yolo issued 500 000 7% non-redeemable cumulative preference shares on 1 June 2021 at a discount of 4%. The preference shares have a par value of R9 each. The dividend was declared at year-end but not yet paid. No accounting entries have been made regarding the preference shares. 4. Yolo issued 100 000 12% debentures at R50 each (at par) on 1 November 2020. Debentures are repayable on 31 October 2025 at par. Coupon payments are made annually. No accounting entries have been made regarding the debentures. 5. Yolo paid R150 000 to SARS (South African Revenue Services) regarding current tax (income tax) during the 2021 financial year. The income tax expense (on profit for the year) has not yet been accounted for the 2021 financial year. 6. Yolo declared and authorised a final ordinary dividend of R0,60 per share on 31 October 2021. R250 000 cash was paid to ordinary shareholders on 30 November 2020 regarding ordinary dividends. Dividend tax has not yet been accounted for. Additional information: . . Ignore VAT. An income tax rate of 28% is applicable. A dividend tax rate of 20% is applicable. Round all amounts to the nearest Rand where applicable. . . Marks (10) (16) You are required to: (a) Calculate the profit after tax of Yolo Ltd for the year ended 31 October 2021. (b) Prepare the statement of changes in equity of Yolo Ltd for the year ended 31 October 2021. Comparative figures are not required. (c) Prepare only the non-current and current liability section of the Statement of Financial Position of Yolo Ltd as at 31 October 2021. The total column and comparative figures are not required. (13)