Question 4
Tselatshweu Limited was registered with authorised 500 000 ordinary
shares and 350 000 5% preference shares on 01 July 2015. On 01 July
2021 the company had the following balances:
Opening Balances
Ordinary share capital @ R5 per share R1 250 000
5%Preference share capital 200 000@ R2.50 per R500 000
share
Retained Earnings R2 850 000
General Reserve R400 000
Transactions
On 02 July 2021 the company offered both the remaining ordinary shares
to the public at R5 per share and the remaining 5% preference share
capital to the public at R2.50.
On 04 July 2021 the company received 300 000 applications for ordinary
shares and 125 000 applications for 5% preference shares. The
successful applications were allotted on the 5th of July and unsuccessful
applications were refunded on the 7 th July 2021.
On 23 December 2021 the directors declared ordinary dividends of 10
cents per share as well as preference dividends. The payment was made
on 30 December 2021.
On 30 June 2022 the directors declared final dividends of 10 cents per
share for ordinary shares and preference dividends.
The company made a profit after tax of R2 220 000 at the end of the
financial year.
Required:
1. Record the above information in the general journal of Tselatshweu
Limited.
2. Prepare the statement of changes in equity for the year ended 30 June
2022.
Dividends tax is applicable at 20%
Calculations:
Opening Ordinary shares R1 250 000/ R5 per shares= 250 000 shares
Remaining shares= 500 000-250 000=250 000
Preference=500 000/2.50=200 000 shares
Remaining= 350 000-200 000= 150 000
SOLUTION:
DR CR
04 July Bank 1 812 500
Application & Allotment: 1 500 000
Ordinary shares (300 000* R5)
Application & Allotment: 312 500
Preference shares (125 000* R2.50)
05 July Application & Allotment: 1 250 000
Ordinary shares
Application & Allotment:Preference 312 500
shares
Ordinary share capital 1 250 000
(250 000* 5)
Preference share capital 312 500
(125 000*2.5)
07th July Application & Allotment: 250 000
Ordinary shares
Bank(1 500 000- 250 000
1 250 000)
(300 000-250 000*R5)
23 Dec Preference Dividends 20313
Ordinary Divdends 50 000
Dividends 56250
payable(70 313*80)
Dividends 14063
tax(20%*70 313)
30th Dec Dividends payable 56 250
Dividend tax 14 063
Bank 70 313
30TH June Preference Dividends 40 625
Ordinary Divdends 50 000
Dividends 72 500
payable
Dividend 18 125
tax(90 625 *20)
Calculations
Preference Dividends= Share capital *%*Period
Interim dividends= OPENING BALANCES R500000*5%*6/12= 12 500
NEW ISSUE= R312 500*5%*6/12= R7813
Total= 12500+ 7813= R20313
Final Dividends = Opnening R500 000*5%*12/12= 25 000
New Issue 312 500*5%* 12/12= 15 625
Ttotal = 25000+15626=R40625
INTERIM ORDINARY DIVIDEN DS= Number of shares * dividends
price/ shares
Opening shares: 250 000*10cents= 25 000
New Issue: 250 000*10cens= 25 000
250 000+250 000=500000*10c=
25000+ 25000=50000
FINAL ORDINARY DIVIDENDS=Opening 250 000 + 250
000*10cens= 50 000
2.Tselatsweu Statement of Changes in Equity for the year ended
30 June 2022
Share Retained General Total
Capital Earnings Reserve
Opening 1 750 000 R2 850 000 400 000 5 000 000
Balances
Profit for the R2 220 000 2 220 000
year
New Issue 1 562 500 1 562 500
Dividends (160 938) (160 938)
Interim (70 313)
Final (90 625)
Closing 3 312 500 4 909 062 400 000 8 621 562
Balance
