- Refer to additional information 2
- Briefly explain the following terms:
- Share (1)
- Share issue cost (1)
- Prospectus (2)
- Prepare the journal entries, which would have been processed for the issue of Class A shares, including any closing entries. (NO narration is required) (7)
- Explain why you have chosen to debit the bank account in question 1.2 above Use the relevant definition and recognition criteria as per the conceptual frame work to support your answer. (7)
- Briefly explain the difference between the Right issue share and the Capitalisation issue share. (4)
- Refer to additional information 3 and 4
- Calculate and show in which financial statement of SAICA Limited for the year ended 31 December 2020, the total depreciation expense will be disclosed (4)
- Prepare the following accounts as they would appear in the books of SAICA Limited for the year ended 31 December 2020
- Asset disposal accounts
- Plant account
- Vehicles account (8)
- Explain why cash flow information is important to users of financial statements. (2)
Company tax rate of 28% The financial statements of SAICA Limited for the year ended 31 December 2020 have been presented below. The financial director has volunteered for early retirement and will be unable to complete the financial statements in time for the audit. You have been hired to complete the financial statements and comment on the results for the period under review. SAICA Limited Extracts from the statement of comprehensive Income Extracts from the statement of comprehensive income 2020 2019 Turnover 2 570 000 2 305 000 Cost of goods sold (1 080 000) (908 000) Investment income 78 000 35 000 Operating expenses (1 243 000) (1 356 000) Interest on long-term borrowings (30 000) (50 000) SAICA Limited Statement of financial position at 31 December 2020 ASSETS 2020 Non-current Assets 1 655 000 2019 1 430 000 Current assets Bank Trade receivables Inventory 353 500 124 500 69 000 160 000 243 000 4 000 50 000 189 000 Total Assets 2 008 500 1 673 000 Equity and liability Share capital and reserves Share capital - Class A (2020: 600 000 shares: 2019: 500 000 shares) Retained earnings - 870 000 630 000 806 500 600 000 Non-current liabilities 250 000 350 000 Current liabilities Trade payables South African revenue services 132 000 120 000 12 000 93 000 85 000 8 000 Total equity and liabilities 2008 500 1 673 000 Page 4 of 13 9 of 2405 words m English (7imbabwe AutoSave Off 002- 2AFA 102... - Search ANDILE KWAZI BUTHELEZI AK File Home Insert Design Layout References Mailings Review View Developer Help Share Comments Note: The property, plant and equipment reconciliation note to the financial statements of SAICA Limited, Additional information 1. Included in investment income are dividends of R10 000 received during the year. The only other income from outside investments is interest. No dividends were paid or declared during 2020 Plant 2 520 000 (1 890 000) 630 000 Vehicles 1 200 000 (600 000) 600 000 2. On 1 June 2020, 100 000 Class A shares were offered to the public at an issue price of R2.60. The shares were underwritten by Old Mutual at a negotiated commission of 5%. The issue was undersubscribed by 20 000 shares. The allotment of shares was issued on 1 August 2029. Share issue expenses of R7 000 were paid, together with underwriter's commission, on 15 August 2020. ? 2 a Gross carrying amount Accumulated depreciation Carrying amount(31 December 2019) Movements Revaluations Additions Disposal Depreciation Impairment Carrying amount (31 December 2020) Accumulated depreciation and impairment Gross Carrying amount ? ? ? 2 ? 972 000 ? ? ? 200 000 3. During the year, plant with a cast of R256 000, vehicles with a cost of R800 000, and equipment with a cost of R400 000 were sold. The plant had been purchased two and half years earlier and was expected to be used for five years in the generations of income. The vehicles had been purchased four years earlier and had estimated useful lives of 8 years at the time of purchase. 2 348 000 330 000 ? 530 000 4. Included in operating expenses are: Profit on disposal of assets R3 200 Loss on disposal of plant R 18 500 Profit on disposal of equipment R 6 800 Interest expense R5 500 5. Long-term borrowings of R200 000 were repaid during the year. Some of these borrowings were replaced with new long-term borrowings, of which R10 000 is repayable in the year 2021, and has been transferred to trade payables as a short term borrowing Page 4 of 12 4 2170 words m English (Zimbabwe FO T Focus 3 1 + 80% Company tax rate of 28% The financial statements of SAICA Limited for the year ended 31 December 2020 have been presented below. The financial director has volunteered for early retirement and will be unable to complete the financial statements in time for the audit. You have been hired to complete the financial statements and comment on the results for the period under review. SAICA Limited Extracts from the statement of comprehensive Income Extracts from the statement of comprehensive income 2020 2019 Turnover 2 570 000 2 305 000 Cost of goods sold (1 080 000) (908 000) Investment income 78 000 35 000 Operating expenses (1 243 000) (1 356 000) Interest on long-term borrowings (30 000) (50 000) SAICA Limited Statement of financial position at 31 December 2020 ASSETS 2020 Non-current Assets 1 655 000 2019 1 430 000 Current assets Bank Trade receivables Inventory 353 500 124 500 69 000 160 000 243 000 4 000 50 000 189 000 Total Assets 2 008 500 1 673 000 Equity and liability Share capital and reserves Share capital - Class A (2020: 600 000 shares: 2019: 500 000 shares) Retained earnings - 870 000 630 000 806 500 600 000 Non-current liabilities 250 000 350 000 Current liabilities Trade payables South African revenue services 132 000 120 000 12 000 93 000 85 000 8 000 Total equity and liabilities 2008 500 1 673 000 Page 4 of 13 9 of 2405 words m English (7imbabwe AutoSave Off 002- 2AFA 102... - Search ANDILE KWAZI BUTHELEZI AK File Home Insert Design Layout References Mailings Review View Developer Help Share Comments Note: The property, plant and equipment reconciliation note to the financial statements of SAICA Limited, Additional information 1. Included in investment income are dividends of R10 000 received during the year. The only other income from outside investments is interest. No dividends were paid or declared during 2020 Plant 2 520 000 (1 890 000) 630 000 Vehicles 1 200 000 (600 000) 600 000 2. On 1 June 2020, 100 000 Class A shares were offered to the public at an issue price of R2.60. The shares were underwritten by Old Mutual at a negotiated commission of 5%. The issue was undersubscribed by 20 000 shares. The allotment of shares was issued on 1 August 2029. Share issue expenses of R7 000 were paid, together with underwriter's commission, on 15 August 2020. ? 2 a Gross carrying amount Accumulated depreciation Carrying amount(31 December 2019) Movements Revaluations Additions Disposal Depreciation Impairment Carrying amount (31 December 2020) Accumulated depreciation and impairment Gross Carrying amount ? ? ? 2 ? 972 000 ? ? ? 200 000 3. During the year, plant with a cast of R256 000, vehicles with a cost of R800 000, and equipment with a cost of R400 000 were sold. The plant had been purchased two and half years earlier and was expected to be used for five years in the generations of income. The vehicles had been purchased four years earlier and had estimated useful lives of 8 years at the time of purchase. 2 348 000 330 000 ? 530 000 4. Included in operating expenses are: Profit on disposal of assets R3 200 Loss on disposal of plant R 18 500 Profit on disposal of equipment R 6 800 Interest expense R5 500 5. Long-term borrowings of R200 000 were repaid during the year. Some of these borrowings were replaced with new long-term borrowings, of which R10 000 is repayable in the year 2021, and has been transferred to trade payables as a short term borrowing Page 4 of 12 4 2170 words m English (Zimbabwe FO T Focus 3 1 + 80%
