3.1. Explain the meaning of the term clientele effect. (4)

3.2. Discuss scrip dividends and why businesses make use of this dividend option. (5)

3.3. The Equity accounts of Kida Ltd are shown below: Ordinary Share Capital (R3 par value) R450 000 Share Premium 100 000 Retained Profits 80 000 Total Shareholders Equity 630 000

3.3.1. If Kida Ltds shares sell for R10 per share at present, and a 10% scrip dividend is declared, how many new shares will be distributed? (6)

3.3.2. Redraft the Equity accounts section of the balance sheet. (6) 3.3.3. Has this been a wise decision? Explain.