QUESTION 2

a) A company values its inventory using the FIFO method. At 1 May 20X5 the company had 700 engines in inventory, valued at R190 each. During the year ended 30 April 20X6 the following transactions took place: 20X5 1 July Purchased 500 engines at R220 each 1 November Sold 400 engines for R160,000 20X6 1 February Purchased 300 engines at R230 each 15 April Sold 250 engines for R125,000 What is the value of the companys closing inventory of engines at 30 April 20X6? (5 marks) b) At 31 December 20X4 a companys capital structure was as follows: R Ordinary share capital 125,000 (500,000 shares of 25c each) Share premium account 100,000 In the year ended 31 December 20X5 the company made a rights issue of 1 share for every 2 held at R1 per share and this was taken up in full. Later in the year the company made a bonus issue of 1 share for every 5 held, using the share premium account for the purpose. What was the companys capital structure (Ordinary share capital and Share premium account) at 31 December 20X5? (5 marks)