Miss

Topics: Stock, Income tax, Stock market Pages: 10 (1952 words) Published: August 22, 2013
GAUTENG DEPARTMENT OF EDUCATION SENIOR SECONDARY INTERVENTION PROGRAMME ACCOUNTING GRADE 12 SESSION 1 (LEARNER NOTES)

TOPIC 1: COMPANIES LEDGER ACCOUNTS SECTION A: TYPICAL EXAM QUESTIONS

HINTS    REMEMBER THE NEW LEDGER ACCOUNTS Income tax only comes about as an adjustment at the end of the year All provisional payments to SARS affect the bank account 50 marks 30 minutes

QUESTION 1

COMPANY LEDGER ACCOUNTS You are provided with information relating to Parboo Ltd for the year ended 29 February 2008. The company has an authorised share capital of 1 000 000 ordinary shares of R4,00 par value each. The Chief Executive Officer (CEO) is Ben Bhengu. REQUIRED: 1.1 Briefly explain what is meant by:  Share capital  Share premium  Retained income 1.2 Refer to information 6. Calculate the correct net profit before tax for the year. (2) (2) (2)

(6)

1.3 Prepare the following accounts in the ledger (the accounts must be properly closed off or balanced).  SARS (Income tax) (11)  Appropriation account (15) 1.4 Consider information 4 regarding the permission granted to the directors to issue shares at their discretion. You are a shareholder but not a director. Provide one point in favour of granting the directors this permission and one point against. 1.5 Refer to the extract from the newspaper article provided.  Consider the complaint by Mary Moosa regarding Bhengu’s director’s fees. Do you agree with her? Explain.  Consider the complaint by Ken Kelly. Is Bhengu’s response acceptable? What else could he have said?

(4)

(4) (4)

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GAUTENG DEPARTMENT OF EDUCATION SENIOR SECONDARY INTERVENTION PROGRAMME ACCOUNTING GRADE 12 SESSION 1 (LEARNER NOTES)

INFORMATION: 1 The following balances appeared in the ledger at the beginning and end of the financial year: Beginning 1 Mar 2007 R2 400 000 R 330 000 R 454 000 R 38 600 (Credit) R 270 000 End 29 Feb 2008 R ? R 505 000 R ? R 11 500 (Debit) R ?

Ordinary share capital (par value R4 each) Share premium Retained income SARS (Income tax) Shareholders for dividends 2. 3.

Amounts owing in respect of the previous financial year to SARS and the shareholders (for dividends) were paid on 10 June 2007. Amounts paid on 31 August 2007:  The first provisional tax payment of R187 500 for the 2008 financial year.  Interim dividend of 84 cents per share (the new shares issued on 1 Sept 2007 do not qualify for these interim dividends, but will receive final dividends. Refer to information note no 4 below). The directors have been granted permission by the shareholders to issue new shares as and when required. The directors decided to issue new shares at a premium of 125 cents during the year. The transactions were handled by New Bank and the relevant amount was received from Star Bank on 1 September 2007.

4.

5. 6.

The second provisional tax payment of R220 000 was made on 29 Feb 2008. At the year-end, the accountant calculated the net profit before tax to be R1 475 000 but thereafter he discovered that the following had not yet been taken into account:  A donation of stock to the Chatsworth Youth Development programme, R70 000.  According to his contract, Ben Bhengu’s directors fees are R110 000 per month. His fees for February had not been paid.  Although rent paid of R175 000 had been correctly recorded, it was discovered that these payments included rent for March and April 2008. At the year-end, 29 February 2008, the directors recommended a final dividend of 110 cents per share. An entry must also be made for income tax for the year. The following article appeared in the newspaper after the AGM:

7.

8.

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GAUTENG DEPARTMENT OF EDUCATION SENIOR SECONDARY INTERVENTION PROGRAMME ACCOUNTING GRADE 12 SESSION 1 (LEARNER NOTES)

Parboo Ltd shareholders take CEO to task By Harry Digger, 10 June 2008 There was certainly a lot of argument at the AGM of Parboo Ltd last week. The company distributes sports equipment and has built up...
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