TEST 2 MODULE Accounting 1 INSTRUCTIONS TO CANDIDATES: Students are advised to carefully read and understand the questions before answering them. Students should follow all specific instructions for individual questions (e.g., list, in point form, show all workings). The mark allocation is an indication of the weight and the length of the question. The responses must be your own work. Plagiarism is a form of academic dishonesty and will not be tolerated. DATE: 16 May 2023 TIME: 18h00 20h00 DURATION: 90 minutes MARKS: 50 QUESTION ONE [25] Circle Trading (Pty) Ltd issues shares during the financial year ended 31 March 2023. Dividends of R75 000 was declared as interim and final dividend during the financial year. Assets with a carrying value of R295 000 was replaced with new equipment during March 2023. The final accounts have been prepared as follows: Statement of Financial Position as at 31 March 2023 Assets 2023 2022 Non-current assets Property, Plant and Equipment 2 645 000 2 580 000 Current assets Inventory 775 000 816 000 Accounts receivable 465 000 513 000 Cash and Cash equivalents 1 654 000 1 235 000 2 894 000 2 564 000 Total assets 5 539 000 5 144 000 Equity and liabilities Equity Share capital 1 556 000 1 223 000 Retained income 2 848 500 1 979 500 4 404 500 3 202 500 Non-current liabilities Loan 8% 850 000 1 755 000 Current liabilities Accounts payable 87 500 78 000 Taxes SARS 92 000 62 500 Shareholders for dividends 105 000 46 000 284 500 186 500 Total equity and liabilities 5 539 000 5 144 000 Statement of Comprehensive Income for the year ended 31 March 2023 2023 2022 Sales 4 563 800 3 675 000 Cost of sales - 2 356 720 - 845 000 Gross profit 2 207 080 2 830 000 Distribution, Administration and other expenses - 983 000 - 628 000 Operating expenses 798 000 465 000 Depreciation 185 000 163 000 Operating profit 1 224 080 2 202 000 Interest on loan 87 031 140 400 Profit before tax 1 311 111 2 342 400 Tax - 367 111 - 655 872 Profit after tax 944 000 1 686 528 Required: Prepare the cashflow statement as at 31 March 2023 on the indirect method. (25) QUESTION TWO [25] Freezer Limited was incorporated on 30 June 2022. The companys authorized share capital consists of: 250 000 7.25% R10 preference shares 4 000 000 R1 ordinary shares The directors paid and received the following shares on 1 July 2022: 100 000 preference shares 2 000 000 ordinary shares Freezer Limited entered into an 2.5% underwriters agreement with Mrs. Cool on 17 July 2022. On 20 July 2022, 800 000 ordinary shares and 50 000 preference shares were offered in a prospectus. By 18 August 2022, applications were received for 815 000 ordinary shares and for 47 000 preference shares. Allotment was made to the public on 31 August 2022 and Mrs. Cool took up her shares. Her account was settled on 3 September 2022. Share issue costs of R1 500 was incurred by Freezer Limited, fully paid on 6 September 2022. Ordinary dividends of 5c were declared and paid on 31 December 2022. Required: Detail the journal entries to report the share transactions as at 31 December 2022. (25) END OF QUESTION PAPER