SECTION A (30 MARKS) BEAU LTD is in the process of accounting for its earnings per share. As a post- graduate student, you were approached to provide assistance, as other interns are of the opinion that IAS 33 and IFRS 9 are 'terrible' accounting standards. The following extracts were provided to you: 2021 2020 R R Profit after tax 1 250 000 1 000 000 Ordinary share capital ? ? ? 120 000 11% Cumulative preference share capital 8% Convertible debentures ? ? Additional notes: 1. The corporate tax rate is 30%. The entity has a 28 February year end; 2. On 1 March 2019, the entity had 525 000 ordinary shares in issue and 200 000 11% cumulative preference shares in issue. No share issuance was made during the year ended 28 February 2020; 3. On 1 July 2018, 1000 8% debentures were issued at a price of R250 per debenture. Similar instruments carry a return rate of 10% per annum, in the current market place. The debentures are convertible into ordinary shares on the date of maturity (30 June 2023), at R10 per ordinary share, at the option of the holder: 4. During the year ended 28 February 2021, the fair value of an ordinary share was R50 per share; 5. On 1 April 2020, management decided to issue another 50 000 11% cumulative preference shares at a fair value of R40 per preference share.; 6. On 1 June 2020, a capitalisation issue was made, where one ordinary share was issued for every 100 ordinary shares held: 7. On 1 July 2019, BEAU LTD issued 10 000 share options, which allows for 10 000 ordinary shares to be taken up at R30 per share, before 28 February 2023; 8. On 1 November 2020, the entity made a rights issue in which 70 000 ordinary shares were taken up at a price of R35 per share. MARKS 5 9 REQUIRED FOR SECTION A: a) Record the general journal entries relating to the 8% convertible debentures, for the year ended 28 February 2019. Refer to note 3. Ignore journal narrations. b) Calculate the weighted average number of ordinary shares, for the year ended 28 February 2021. Comparatives are required. C) Calculate the basic earnings per share the year ended 28 February 2021. Ignore comparatives. d) Calculate the diluted earnings per share for the year ended 28 February 2021. Ignore comparatives. TOTAL MARKS 4 12 30 NB: ROUND ALL RAND VALUES TO TWO DECIMAL PLACES. ROUND THE NUMBER OF SHARES TO THE NEAREST WHOLE SHARE. SECTION A (30 MARKS) BEAU LTD is in the process of accounting for its earnings per share. As a post- graduate student, you were approached to provide assistance, as other interns are of the opinion that IAS 33 and IFRS 9 are 'terrible' accounting standards. The following extracts were provided to you: 2021 2020 R R Profit after tax 1 250 000 1 000 000 Ordinary share capital ? ? ? 120 000 11% Cumulative preference share capital 8% Convertible debentures ? ? Additional notes: 1. The corporate tax rate is 30%. The entity has a 28 February year end; 2. On 1 March 2019, the entity had 525 000 ordinary shares in issue and 200 000 11% cumulative preference shares in issue. No share issuance was made during the year ended 28 February 2020; 3. On 1 July 2018, 1000 8% debentures were issued at a price of R250 per debenture. Similar instruments carry a return rate of 10% per annum, in the current market place. The debentures are convertible into ordinary shares on the date of maturity (30 June 2023), at R10 per ordinary share, at the option of the holder: 4. During the year ended 28 February 2021, the fair value of an ordinary share was R50 per share; 5. On 1 April 2020, management decided to issue another 50 000 11% cumulative preference shares at a fair value of R40 per preference share.; 6. On 1 June 2020, a capitalisation issue was made, where one ordinary share was issued for every 100 ordinary shares held: 7. On 1 July 2019, BEAU LTD issued 10 000 share options, which allows for 10 000 ordinary shares to be taken up at R30 per share, before 28 February 2023; 8. On 1 November 2020, the entity made a rights issue in which 70 000 ordinary shares were taken up at a price of R35 per share. MARKS 5 9 REQUIRED FOR SECTION A: a) Record the general journal entries relating to the 8% convertible debentures, for the year ended 28 February 2019. Refer to note 3. Ignore journal narrations. b) Calculate the weighted average number of ordinary shares, for the year ended 28 February 2021. Comparatives are required. C) Calculate the basic earnings per share the year ended 28 February 2021. Ignore comparatives. d) Calculate the diluted earnings per share for the year ended 28 February 2021. Ignore comparatives. TOTAL MARKS 4 12 30 NB: ROUND ALL RAND VALUES TO TWO DECIMAL PLACES. ROUND THE NUMBER OF SHARES TO THE NEAREST WHOLE SHARE