ACCOUNTING

GRADE 12
CHAPTER 3
COMPANIES: NEW TRANSACTIONS

Worksheet
Compiled by:
[MRS BRIMECOMBE]
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 TABLE OF CONTENTS Page
Activity 1: Issuing of shares 3
Activity 2: Buying back shares 5
Activity 3: Dividends per share 8
Activity 4: Income tax 11
Activity 5: Income tax 13
Activity 6: Audit fees 15
Activity 7: Director’s fee 16
Activity 8: Combined activity 19

Accounting – Grade 12 Chapter 2 All Rights Reserved.

COMPANIES: NEW TRANSACTIONS
ACTIVITY 1: ISSUING OF SHARES

You are provided with the information relating to AR Limited. The financial year ends 30 June
2021. The company has an authorised share capital of 1 250 000 ordinary shares. 60% of the
authorised shares had been in issue on 1 July 2020.
REQUIRED:
1. Complete the Ordinary share capital account in the General Ledger

2. Show the effect on the Accounting equation for transaction 1.

Note: The business has a favourable bank balance.

3. Prepare the Ordinary share capital note in the Balance sheet

4. Calculate the following on 30 June 2021:

a) Average share price
b) Net asset value

INFORMATION:

A Post Closing Trial balance on 30 June 2020:

R
Ordinary share capital 1 500 000
Retained income 450 000

B TRANSACTIONS AND ADJUSTMENTS:

I. On 30 April 2021, the company sold 250 000 shares to the public at R3 per share.
II. The net profit after tax was R320 000.

C FINANCIAL INDICATOR ON 30 JUNE 2020:

Net asset value 260c

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COMPANIES: NEW TRANSACTIONS
ACTIVITY 1: ISSUING OF SHARES
ANSWER BOOK

1. Complete the Ordinary share capital account in the General Ledger

ORDINARY SHARE CAPITAL

2. Show the effect on the Accounting equation for transaction 1.

Note: The business has a favourable bank balance.

ACCOUNT DEBIT ACCOUNT CREDIT ASSETS OWNERS LIABILITIES

3. Prepare the Ordinary share capital note in the Balance sheet

ORDINARY SHARE CAPITAL

Authorised share capital

Issued share capital

Ordinary shares at beginning of year
Ordinary shares issued during the year at _____
Ordinary shares at the end of the year

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4. Calculate the following on 30 June 2021:

a) Average share price

b) Net asset value

COMPANIES: NEW TRANSACTIONS

ACTIVITY 2: BUYING BACK SHARES

You are provided with the information relating to Fixit Limited. The financial year ends yearly 30
June. The company has an authorised share capital of 300 000 ordinary shares. The company
has 200 000 shares in issue on 1 July 2020.
REQUIRED:
1. Complete the Ordinary share capital and the Retained income account in the General
Ledger.

2. Show the effect on the Accounting equation for transaction 1.

Note: The business has a favourable bank balance.

3. Prepare the Ordinary share capital note and the Retained income note in the Balance sheet.

4. Indicate which amount will appear in your Cash Flow Statement.

5. Calculate the following on 30 June 2021:

a) Average share price
b) Net asset value

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INFORMATION:

A Post Closing Trial balance on 30 June 2020:

Ordinary share capital 1 000 000

Retained income 260 000

B TRANSACTIONS AND ADJUSTMENTS:

I. The directors agreed to buy-back 50 000 ordinary shares from the estate of a
deceased shareholder on 1 May 2021 for 620c
II. The net profit after tax was R180 000.

C FINANCIAL INDICATOR ON 30 JUNE 2020:

Net asset value 630c

COMPANIES: NEW TRANSACTIONS

ACTIVITY 2: BUYING BACK SHARES
ANSWER BOOK

1. Complete the Ordinary share capital and the Retained income account in the General
Ledger.

ORDINARY SHARE CAPITAL

RETAINED INCOME

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2. Show the effect on the Accounting equation for transaction 1.
Note: The business has a favourable bank balance.

ACCOUNT DEBIT ACCOUNT CREDIT ASSETS OWNERS LIABILITIE

S

3. Prepare the Ordinary share capital note and the Retained income note in the Balance
sheet.

ORDINARY SHARE CAPITAL

Authorised share capital

Issued share capital

Ordinary shares at beginning of year
Ordinary shares issued during the year at _____
Ordinary shares at the end of the year

RETAINED INCOME

Retained income at the beginning of the year

Net profit after tax for the year

Repurchase of shares

Dividends on ordinary shares:

Retained income at the end of the year

4. Indicate which amount will appear in your Cash Flow Statement.

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5. Calculate the following on 30 June 2021:

a) Average share price

b) Net asset value

COMPANIES: NEW TRANSACTIONS

ACTIVITY 3: DIVIDENDS PER SHARE
The company has an Authorised share capital of 500 000 ordinary shares. On 1 March 2020,
300 000 shares were in issue.

REQUIRED:

1. Complete the Dividends on ordinary shares and Shareholders for dividends in the General
Ledger account.

2. Show the effect on the Accounting equation for the following:

• The interim dividends paid on 31 August 2020.
• Final dividends recommended on 28 February 2021.
Note: The business has a favourable bank balance.

3. What amount would be shown in the Balance sheet in respect of dividends on 28 February
2021. Indicate where in the Balance Sheet it would appear.

4. What is the total outflow of cash for dividends paid during the current financial year?

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INFORMATION:

A POST CLOSING TRIAL BALANCE ON 28 FEBRUARY 2020:

Shareholders for dividends R150 000

B TRANSACTIONS AND ADJUSTMENTS:

30 March 2020 Paid the amount due to shareholders

1 June 2020 The remainder of the shares were issued at 250c per share. These
shares DO NOT qualify for the interim dividends paid on 31 August
2020.
31 August 2020 After 6 months of trading, a dividend of 60c per share was declared
and paid.
28 February 2021 A dividend of 65c per share was declared. These dividends will
only be paid in the next financial year.
COMPANIES: NEW TRANSACTIONS
ACTIVITY 3: DIVIDENDS PER SHARE
ANSWER BOOK
1. Complete the Dividends on ordinary shares and Shareholders for dividends in the General
Ledger account.
DIVIDENDS ON ORDINARY SHARES

SHAREHOLDERS FOR DIVIDENDS

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2. Show the effect on the Accounting equation for the following:
• The interim dividends paid on 31 August 2020.
• Final dividends recommended on 28 February 2021.
Note: The business has a favourable bank balance.

ACCOUNT ACCOUNT ASSETS OWNERS LIABILITIES

DEBITED CREDITED EQUITY

1.

2.

3. What amount would be shown in the Balance sheet in respect of dividends on 28 February
2021. Indicate where in the Balance Sheet it would appear.

4. What is the total outflow of cash for dividends paid during the current financial year?

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COMPANIES: NEW TRANSACTIONS
ACTIVITY 4: INCOME TAX
REQUIRED:

1. Complete the following General Ledger account:

q SARS: Income Tax
q Income tax

2. Show the effect on the Accounting equation for the following:

• The 1st provisional tax payment
• The total Income tax expense
Note: The business has a favourable bank balance.

3. What amount would be shown in the Balance sheet for SARS: Income Tax on 30 June
2021. Indicate if this will be shown as a Current asset or Current Liability.

4. What is the total outflow of cash for Income tax paid during the current financial year?

INFORMATION:

A The following opening balance appeared in the Ledger of AR Limited on 1 July 2020:

SARS (Income Tax) R4 800 (Cr)

B TRANSACTIONS AND ADJUSTMENTS:

I. Amount owing to SARS the previous year was paid on 30 July 2020.
II. The first provisional tax payment of R60 000 were paid on 31 December 2020.
III. A second provisional tax payment of R65 000 was made on 30 June 2021.
IV. The audited financial statements showed a taxable profit of R475 200 for the year.
The tax rate is 28%.

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COMPANIES: NEW TRANSACTIONS
ACTIVITY 4: INCOME TAX
ANSWER BOOK
1. Complete the following General Ledger account:
SARS: INCOME TAX

INCOME TAX

2. Show the effect on the Accounting equation for the following:

ACCOUNT ACCOUNT ASSETS OWNERS LIABILITIES
DEBITED CREDITED EQUITY
1.

2.

3. What amount would be shown in the Balance sheet for SARS: Income Tax on 30 June
2021. Indicate if this will be shown as a Current asset or Current Liability.

4. What is the total outflow of cash for Income tax paid during the current financial year?

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COMPANIES: NEW TRANSACTIONS
ACTIVITY 5: INCOME TAX
REQUIRED:

1. Complete the following General Ledger account:

q SARS: Income Tax
q Income tax

2. Show the effect on the Accounting equation for the following:

• The 1st provisional tax payment
• The total Income tax expense
Note: The business has a favourable bank balance.

3. What amount would be shown in the Balance sheet for SARS: Income Tax on
28 February 2021. Indicate if this will be shown as a Current asset or Current Liability.

4. What is the total outflow of cash for Income tax paid during the current financial year?

INFORMATION:

A The following opening balance appeared in the Ledger of AR Limited on

1 March 2020:
SARS (Income Tax) R18 000 (Cr)

B TRANSACTIONS AND ADJUSTMENTS:

I. The amount owed to SARS was paid on 20 March 2020.

II. The first provisional tax payment of R250 000 were paid on 31 August 2020.
III. A second provisional tax payment of R250 000 was made on 28 February 2021.
IV. AR Limited were owed R8 000 by SARS the year ended
28 February 2021. Income tax must be brought into account.

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COMPANIES: NEW TRANSACTIONS
ACTIVITY 5: INCOME TAX
ANSWER BOOK
1. Complete the following General Ledger account:
SARS: INCOME TAX

INCOME TAX

2. Show the effect on the Accounting equation for the following:

ACCOUNT ACCOUNT ASSETS OWNERS LIABILITIES
DEBITED CREDITED EQUITY
1.

2.

3. What amount would be shown in the Balance sheet for SARS: Income Tax on
28 February 2021. Indicate if this will be shown as a Current asset or Current Liability.

4. What is the total outflow of cash for Income tax paid during the current financial year?

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COMPANIES: NEW TRANSACTIONS
ACTIVITY 6: AUDIT FEES
REQUIRED:

1. Show the effect on the Accounting equation. The business has a favourable bank balance.

2. Calculate the total Audit fees for this Accounting period.

3. Indicate how it will appear in the Financial Statements for:

• Audit fees for this Accounting period.
• Audit fees still outstanding.

INFORMATION:

A TRANSACTIONS AND ADJUSTMENTS:

I. Paid the independent auditors, SW Associates, R85 000, for work done to date.
II. Provide for further R62 000 owed to the independent auditors.

COMPANIES: NEW TRANSACTIONS

ACTIVITY 6: AUDIT FEES
ANSWER BOOK
REQUIRED:

1. Show the effect on the Accounting equation. The business has a favourable bank balance.
ACCOUNT ACCOUNT ASSETS OWNERS LIABILITIES
DEBITED CREDITED EQUITY
1.

2.

2. Calculate the total Audit fees for this Accounting period.

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3. Indicate how it will appear in the Financial Statements for:

Audit fees for this Accounting period.

Audit fees outstanding for this Accounting period.

COMPANIES: NEW TRANSACTIONS

ACTIVITY 7: DIRECTORS FEE
REQUIRED:

1. Show the effect on the Accounting equation. The business has a favourable bank balance.

2. Calculate the total Directors fee for this Accounting period.

3. Indicate how it will appear in the Financial Statements for:

• Directors fee for this Accounting period.
• Directors fee still outstanding.

INFORMATION:

A TRANSACTIONS AND ADJUSTMENTS:

I. Paid the directors 30% of their fees for the year. K. Zondo was paid R90 000, and
H. Globe was paid R60 000.
II. Provide for the amounts owed to the directors in respect of their directors' fee.

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COMPANIES: NEW TRANSACTIONS
ACTIVITY 7: DIRECTORS FEE
ANSWER BOOK
REQUIRED:

1. Show the effect on the Accounting equation. The business has a favourable bank balance.
ACCOUNT ACCOUNT ASSETS OWNERS LIABILITIES
DEBITED CREDITED EQUITY
1.

2.

2. Calculate the total Directors fee for this Accounting period.

3. Indicate how it will appear in the Financial Statements for:

Directors Fee for this Accounting period

Director's fee outstanding for this Accounting period

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COMPANIES: NEW TRANSACTIONS
ACTIVITY 8: COMBINED ACTIVITY
You are provided with information relating to Padox Limited for the year ended 30 April 2021.
The company has an authorised share capital of
2 500 0000 ordinary shares. 50% of the authorised shares had not yet been issued on 1 May
2020, the beginning of the accounting period. The Chief Executive Officer (CEO) is Ms Louisa

REQUIRED:

1. Refer to INFORMATION B, POINT NUMBER VI. Show the effect on the Accounting
equation. The business has a favourable bank balance.

2. Complete the following ledger account for the year ended 30 April 2021:

Ordinary share capital

SARS: Income tax

Appropriation account

3. Complete the Retained income note on 30 April 2021.

4. Calculate the number of shares in issue on 30 April 2021.

5. Ms Louisa Roux currently owns 720 000 shares herself.

• As a shareholder, should you be happy with the price that was paid for the repurchase of
the shares? Comment, quoting and appropriate financial indicator to support your
opinion.
• How has Ms Louisa Roux’s % shareholding in the company been affected by the
repurchase of the shares? Provide calculations to support your answer.
6. Why should the directors’ fee be shown separate from the Salaries and Wages

7. Calculate the total dividends paid this accounting period which will appear in your Cash
Flow Statement.

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INFORMATION:

A The following balances appeared in the Ledger of Padox Limited on 1 May 2020

Ordinary share capital 7 500 000

Retained income 1 150 000

SARS (Income Tax) 25 000(Cr)

Shareholders for dividends 460 000

B Transactions for year ended on 30 April 2021.

I) A number of ordinary shares were issued on 20 May 2020. All shares were allocated
and R2 250 0000 were received on 31 May 2020.

II) The amount due to Shareholders and SARS were paid on 31 May 2020.

III) The company paid provisional tax of R242 500 and interim dividends of 50 cents per
share on 31 October 2020. This was applicable to all shareholders. R750 000 was
paid to the shareholders.

IV) On 30 April 2021, the company decided to repurchase 100 000 shares at 150 cents
higher than the average price per share. They will qualify for final dividends.

V) At the end of the accounting period, the company made a second provisional tax
payment of R242 500, and the directors declared a final dividend of 62 cents per
share.

VI) On 30 April 2021, the end of the financial year, the accountant calculated the net profit
before tax to be R1 830 000, but thereafter discovered that the following had not yet
been considered:

The directors fee for April 2021 had been debited to the salaries and wages account
in error. The total directors fee for this accounting period was R840 000.

The auditors will only be paid R75 000 on 15 May 2021 for work done in April 2021.

Income tax is calculated at 28% on the net profit before tax.

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COMPANIES: NEW TRANSACTIONS
ACTIVITY 8: COMBINED ACTIVITY
ANSWER BOOK
1. Refer to INFORMATION B, POINT NUMBER VI. Show the effect on the Accounting
equation. The business has a favourable bank balance.
ACCOUNT ACCOUNT ASSETS OWNERS LIABILITIES
DEBITED CREDITED EQUITY
1.

2.

3.

2. Complete the following ledger account for the year ended 30 April 2021:

ORDINARY SHARE CAPITAL

SARS: INCOME TAX

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 APPROPRIATION ACCOUNT

3. Complete the Retained income note on 30 April 2021.

RETAINED INCOME

Retained income at the beginning of the year

Net profit after tax for the year

Repurchase of shares

Dividends on ordinary shares:

Interim

Final

Retained income at the end of the year

4. Calculate the number of shares in issue on 30 April 2021.

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5. Ms Louisa Roux currently owns 720 000 shares herself.

As a shareholder, should you be happy with the price that was paid for the repurchase of
the shares? Comment, quoting and appropriate financial indicator to support your opinion.

How has Ms Louisa Roux’s % shareholding in the company been affected by the
repurchase of the shares? Provide calculations to support your answer.

6. Why should the directors’ fee be shown separate from the Salaries and Wages

7. Calculate the total dividends paid this accounting period which will appear in your Cash
Flow Statement.

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