QUESTION 4

Use the relevant information provided below to prepare the following:

4.1 Journal entries to record the final dividend and total company tax for the financial year. (4 marks)

Statement of Financial Position (Balance Sheet) as at 31 August 2022 (16 marks)

INFORMATION

The following balances were obtained from the accounting records of Cadac Limited on 31 August 2022, the end of the financial year:

Ordinary share capital 512 500

General administration expenses 150 000

4.2 Long-term loan 300 000

Bad debts 17 000

12% Preference shares 220 000

Equipment (cost) 30 000

Retained profit 115 000

Accumulated depreciation on equipment (01 September 2021) 6 000

Vehicles (cost) 200 000

Inventory 147 000

Accumulated depreciation on vehicles (01 September 2021) 40 000

Creditors control 420 000

Debtors control 400 000

Bank 558 500

Petty cash 1 000

Shares invested in ABC Limited 335 000

Additional information

a) Depreciation on equipment and vehicles for the year ended 31 August 2022 amounted to R3 000 and R20 000 respectively.

b) A final dividend of 10 cents per ordinary share was declared but not paid. There were 200 000 ordinary shares in issue. (This dividend was included in the calculation of retained profit.)

c) The total company tax for the financial year amounted to R200 000. The provisional payments to the tax authority amounted to R185 000.

QUESTION 5

Calculate the following ratios for 2021 and in each case state whether there has been an improvement or deterioration in the ratio. Express the answers to the ratios to two decimal places. The ratios for 2020 are provided in brackets.

5.1 Operating profit margin (2020: 12.49%) (3 marks)

5.2 Trade receivables average number of days (2020: 89.65 days) (3 marks)

5.3 Return on capital employed (2020: 13.97%) (3 marks)

5.4 Current ratio (2020: 1.48:1) (3 marks)

5.5 Acid test ratio (2020: 0.98:1) (3 marks)

5.6 Interest cover ratio (2020: 4.31 times) (2 marks)

5.7 Inventory average number of days (2020: 75.32 days) (3 marks)