(38 Marks) Mururani Ltd is company listed in the Namibia Stock Exchange (NSX) provides you with...

  

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(38 Marks) Mururani Ltd is company listed in the Namibia Stock Exchange (NSX) provides you with this information from their Accounting records as at 1 May 2020: 250 000 ordinary share capital at N$ 5.00 100 000 Cumulative preference share capital at N$ 2.00 Share premium Capital redemption reserve fund Revaluation surplus Asset replacement reserve Retained earnings Income Tax (Refund) The board of directors of Mururani Ltd have proposed an aggressive strategic plan to expand the business operations. To finance this strategy the board 01 June 2020 decided to raise capital using the following means: 1 250 200 000 55 000 25 000 280 000 100 000 800 000 15 000 1. 10%, 50 000 debentures of N$ 100 each was offered at a premium of 5% payable i full on application. The debenture premium is to be amortised over the life of the debentures using the effective interest rate method at 9.2242 %. 2. The company issued 100 000ordinary shares at N$ 5.00, each at a premium of 50c. Additional Information: a) The entire issue is underwritten by Rundu Investment Bank Ltd for a commission of 5%. All debentures were taken-up but applications were received for 80 000 shares. The floatation expenses amounted to N$ 16 000 was paid. b) 1 August 2020 shares and debentures were allotted to applicants and on 15 August 2020 all transactions with the underwriters were completed. c) In a bid to improve Mururani Ltds liquidity the board resolved to offer 1 capitalisation share for every 5 ordinary shares held as at 31 August 2020. This will be done in such a way that there is a minimal effect on distributable reserves. d) These income tax transactions took place during the year; . 31/08/2020: Provisional payment . 28/02/2021: Provisional payment e) On 30 April 2021: . . N$ 210 000 N$ 180 000 A transfer of N$ 80 000 was made to asset replacement reserve. Machinery was revalued at during the year resulting in a N$ 120 000 increase in the revaluation surplus . It was proposed that ordinary shareholders will not be paid any dividend but the preference share dividend which had accrued was to be provided for. . The profit for the period amounted to NS 1 400 000after all adjustments pertaining to the year were made. Page 23 of 25 . You are required to: 2.1 Prepare the journal of Mururani Ltd to effect the above transactions (Narrations are not required) 19 marks Income tax is payable at 30 % 2.2 Prepare the following accounts in the general ledger of Mururani Ltd. Rundu investment bank Ltd (3 marks) (2 marks) Application and allotment: ordinary shares (2 marks) Ordinary share accounts (3 marks) 2.3 Prepare the extract of the statement of financial position for Mururani LTD as at 30 April 2021 only showing non-current liabilities (3 marks) 2.4 Explain four rights of a shareholder 2.5 The Companies Act prohibits the company from allocating purchase price has not yet been received. Answer True or False • Income tax payable ● ● (4 marks) shares for which the full (2 marks) (38 Marks) Mururani Ltd is company listed in the Namibia Stock Exchange (NSX) provides you with this information from their Accounting records as at 1 May 2020: 250 000 ordinary share capital at N$ 5.00 100 000 Cumulative preference share capital at N$ 2.00 Share premium Capital redemption reserve fund Revaluation surplus Asset replacement reserve Retained earnings Income Tax (Refund) The board of directors of Mururani Ltd have proposed an aggressive strategic plan to expand the business operations. To finance this strategy the board 01 June 2020 decided to raise capital using the following means: 1 250 200 000 55 000 25 000 280 000 100 000 800 000 15 000 1. 10%, 50 000 debentures of N$ 100 each was offered at a premium of 5% payable i full on application. The debenture premium is to be amortised over the life of the debentures using the effective interest rate method at 9.2242 %. 2. The company issued 100 000ordinary shares at N$ 5.00, each at a premium of 50c. Additional Information: a) The entire issue is underwritten by Rundu Investment Bank Ltd for a commission of 5%. All debentures were taken-up but applications were received for 80 000 shares. The floatation expenses amounted to N$ 16 000 was paid. b) 1 August 2020 shares and debentures were allotted to applicants and on 15 August 2020 all transactions with the underwriters were completed. c) In a bid to improve Mururani Ltds liquidity the board resolved to offer 1 capitalisation share for every 5 ordinary shares held as at 31 August 2020. This will be done in such a way that there is a minimal effect on distributable reserves. d) These income tax transactions took place during the year; . 31/08/2020: Provisional payment . 28/02/2021: Provisional payment e) On 30 April 2021: . . N$ 210 000 N$ 180 000 A transfer of N$ 80 000 was made to asset replacement reserve. Machinery was revalued at during the year resulting in a N$ 120 000 increase in the revaluation surplus . It was proposed that ordinary shareholders will not be paid any dividend but the preference share dividend which had accrued was to be provided for. . The profit for the period amounted to NS 1 400 000after all adjustments pertaining to the year were made. Page 23 of 25 . You are required to: 2.1 Prepare the journal of Mururani Ltd to effect the above transactions (Narrations are not required) 19 marks Income tax is payable at 30 % 2.2 Prepare the following accounts in the general ledger of Mururani Ltd. Rundu investment bank Ltd (3 marks) (2 marks) Application and allotment: ordinary shares (2 marks) Ordinary share accounts (3 marks) 2.3 Prepare the extract of the statement of financial position for Mururani LTD as at 30 April 2021 only showing non-current liabilities (3 marks) 2.4 Explain four rights of a shareholder 2.5 The Companies Act prohibits the company from allocating purchase price has not yet been received. Answer True or False • Income tax payable ● ● (4 marks) shares for which the full (2 marks)

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