Accounting Question 2 full question

ASSIGNMENTI FINANCIAL ACCOUNTING I FA260US Questions 2 IC Ltd is a successful industrial company with a financial year end of 30 September. IC Ltd is a listed company and also makes seats for motor car manufactures. The following balances appeared in the books of C Ltd for the period ended 30 September 2020 Dr Cr NS NS Land & buildings 3 400 000 Accumulated depreciation on Building 150 000 Plant and Equipment: cost 1 100 000 Accumulated depreciation on Equipment & Plant 120 000 Trade inventories 810 000 Trade receivables 536 000 Ordinary share capital 2 600 000 Retained earning 942 000 Ordinary dividend 90 000 Current tax payable: income 90 000 Trade payables 425 000 12% debentures 1425000 Bank 662 724 15% redeemable preference shares 250 000 Gross profit 1801 724 Administrative expenses 400 000 Distribution expenses 385 000 Other operating expenses 240 000 7 788 724 7 788 724 Additional information The following information is relevant for the preparation of the financial statements: 1. The land and building were acquired on 1 October 2018 for amount of N$ 3 400 000 (N$ 400 000 for the land and N$ 3 000 000 for the building). The building is deprecated at 5 % per year on the straight line method. 2. The plant and equipment is depreciated on the sum of unit's method. The total estimated output of the plant and equipment is 20 million units. During the current period, a total of 1 750 000 units were produce. All of the plant and equipment was purchased on the same date during the previous financial year. 3. The ordinary share capital at 30 September 2020 consists of 2 000 000 shares. On incorporation, 1000 000 shares were issued to the incorporators for N$ 1 each. On 1 July 2020, 1 000 000 shares were issued to the public at an issue price of N$ 1.60 each. Share issue costs of N$ 55 000 were incurred and paid and are included in the operating expenses on the trial balance. 4. On 10ctober 2019 the company issued 10 000 debentures of N$ 150 par value at a discount of 5%. The debentures are to be redeemed on 30 September 2024 at par. The interest rate is 12% per annum and is payable annually in arrears on 1 October each year. The debenture discount is to be remunerated over the life of the debentures using the effective rate method. The effective interest rate is 13, 4367% and the accountant has correctly prepared the following paying back schedule: Date Effective interest Actual interest Debenture NPV discount 01/10/2019 75 000 1425 000 30/09/2020 191 474 180 000 (11 474) 1 436 474 30/09/2021 193 015 180 000 (13015) 1 449 489 30/09/2022 194 764 180 000 (14 764) 30/09/2023 196 748 180 000 (16 748) 1 481 001 30/09/2026 198 999 180 000 (18 999) 1 500 000 1464 253 5. The reference share capital at 30 September 2020 consists of 100 000 15% redeemable preference shares issued at N$ 2,50 each. The shares were placed privately at a large financial institution on 1 April 2020 for an amount of N$ 250 000 and are subject to compulsory redemption by the company after a period of three years 6. Company tax must still be accounted for at the correctly calculated amount of N$ 118 200 7. An extract from the minutes of a directors meeting on 30 September 2020 appears as follows: a) Declare the preference dividend to all shareholders registered on 30 September 2020 to be paid on 15 October 2020. The preference shareholders are subject to 15 dividends tax. b) Declaration of ordinary dividend : 8 cents per share cash dividend to all shareholders registered on 30 September 2020, to be paid on 15 October 2020. 4 cents per share capitalisation issue to all shareholders registered on 30 September 2020. The ordinary shareholders are subject to 15% dividend tax on the cash dividend but are not liable for dividends tax on the capitalisation issue. You are required to: a) Prepare the statement of profit or loss of JC Ltd for the year ended 30 September 2020 (20Marks) b) Prepare the statement of change in equity of JC Ltd for the year ended 30 September 2020. (10 Marks) c) Prepare the statement of financial position of JC Ltd as at 30 September 2020. (20 Marks) [Total 50 Marks] ASSIGNMENTI FINANCIAL ACCOUNTING I FA260US Questions 2 IC Ltd is a successful industrial company with a financial year end of 30 September. IC Ltd is a listed company and also makes seats for motor car manufactures. The following balances appeared in the books of C Ltd for the period ended 30 September 2020 Dr Cr NS NS Land & buildings 3 400 000 Accumulated depreciation on Building 150 000 Plant and Equipment: cost 1 100 000 Accumulated depreciation on Equipment & Plant 120 000 Trade inventories 810 000 Trade receivables 536 000 Ordinary share capital 2 600 000 Retained earning 942 000 Ordinary dividend 90 000 Current tax payable: income 90 000 Trade payables 425 000 12% debentures 1425000 Bank 662 724 15% redeemable preference shares 250 000 Gross profit 1801 724 Administrative expenses 400 000 Distribution expenses 385 000 Other operating expenses 240 000 7 788 724 7 788 724 Additional information The following information is relevant for the preparation of the financial statements: 1. The land and building were acquired on 1 October 2018 for amount of N$ 3 400 000 (N$ 400 000 for the land and N$ 3 000 000 for the building). The building is deprecated at 5 % per year on the straight line method. 2. The plant and equipment is depreciated on the sum of unit's method. The total estimated output of the plant and equipment is 20 million units. During the current period, a total of 1 750 000 units were produce. All of the plant and equipment was purchased on the same date during the previous financial year. 3. The ordinary share capital at 30 September 2020 consists of 2 000 000 shares. On incorporation, 1000 000 shares were issued to the incorporators for N$ 1 each. On 1 July 2020, 1 000 000 shares were issued to the public at an issue price of N$ 1.60 each. Share issue costs of N$ 55 000 were incurred and paid and are included in the operating expenses on the trial balance. 4. On 10ctober 2019 the company issued 10 000 debentures of N$ 150 par value at a discount of 5%. The debentures are to be redeemed on 30 September 2024 at par. The interest rate is 12% per annum and is payable annually in arrears on 1 October each year. The debenture discount is to be remunerated over the life of the debentures using the effective rate method. The effective interest rate is 13, 4367% and the accountant has correctly prepared the following paying back schedule: Date Effective interest Actual interest Debenture NPV discount 01/10/2019 75 000 1425 000 30/09/2020 191 474 180 000 (11 474) 1 436 474 30/09/2021 193 015 180 000 (13015) 1 449 489 30/09/2022 194 764 180 000 (14 764) 30/09/2023 196 748 180 000 (16 748) 1 481 001 30/09/2026 198 999 180 000 (18 999) 1 500 000 1464 253 5. The reference share capital at 30 September 2020 consists of 100 000 15% redeemable preference shares issued at N$ 2,50 each. The shares were placed privately at a large financial institution on 1 April 2020 for an amount of N$ 250 000 and are subject to compulsory redemption by the company after a period of three years 6. Company tax must still be accounted for at the correctly calculated amount of N$ 118 200 7. An extract from the minutes of a directors meeting on 30 September 2020 appears as follows: a) Declare the preference dividend to all shareholders registered on 30 September 2020 to be paid on 15 October 2020. The preference shareholders are subject to 15 dividends tax. b) Declaration of ordinary dividend : 8 cents per share cash dividend to all shareholders registered on 30 September 2020, to be paid on 15 October 2020. 4 cents per share capitalisation issue to all shareholders registered on 30 September 2020. The ordinary shareholders are subject to 15% dividend tax on the cash dividend but are not liable for dividends tax on the capitalisation issue. You are required to: a) Prepare the statement of profit or loss of JC Ltd for the year ended 30 September 2020 (20Marks) b) Prepare the statement of change in equity of JC Ltd for the year ended 30 September 2020. (10 Marks) c) Prepare the statement of financial position of JC Ltd as at 30 September 2020. (20 Marks) [Total 50 Marks]