Diraster Ltd ('Diraster') is a hedge fund that is listed on the JSE Ltd with a 31 January year end. Diraster researches various investment options on behalf of clients and invests their money according to their preferences. Massief Diraster, the CEO and founder of Diraster, has never been very good at the administration and accounting side of the business and often loses documents. He has approached you for help, but ca only offer you certain information.
Trial balance extract at 31 January 2009
| |
Note |
Debit |
Credit |
|
Long - term loan
Interest payable
|
4
4
|
|
4,500,000
350,625
|
|
Application and allotment
Shareholders for ordinary dividend
|
1
2
|
|
5,382,000
60,000
|
|
Shareholder for preference dividend
Stated capital (2 000 000 ordinary shares)
|
3
1
|
|
?
8,000,000
|
|
Preference share capital
Retained eamings - closing balance
|
3
|
|
?
25,988,000
|
Notes
1) 754 000 ordinary shares were issued on 28 February 2009. R120 000 was returned to application due to an oversubscription.
2) The underwriter was paid commission of 2%.
3) Diraster accounting policy with respect to share issue costs is to minimise distributable reserves.
4) Underwriting commission was not accrued in the previous final year.
5) The dividend payable from the previous financial year was settled on 3 February 2009.
6) Diraster declared and paid an ordinary interim dividend of 7 cents per share on 15 February 2009 and declared a final dividend of 5 cc. per share on 30 January 2010.
7) The final dividend was paid on 3 February 2010.
8) Diraster had issued 30 000, R3, 6, cumulative preference shares on 1 February2007.
9) Preference shares have never been issued at a premium.
10) If declared, preference dividends are paid on 1 February.
11) The R60 000 (Ain, dividend of the prior financial year was the first dividend ever to be declared by Diraster.
12) The long- tem bears simple interest at 8, 5% on the outstanding balance.
13) Two capital repayments of R700 000 and R800 000 were made on 31 June 2009 and 31 December 2009 respectively.
14) Interest is payable annually on 28 February.
15) The net profit in the income statement is started at R7 654 000 for the year ended 31 January 2010.
16) This is before any of the above information has been taken into account.
Required
1) Calculate the price at which each ordinary share was issued in the current year.
2) Prepare all the journal entries that should be processed in the 2010 financial year that relate to the share issue.
3) Calculate the dividends paid to ordinary and preference shareholders during the year ended 31 January 2010. If in your opinion any of the dividend in the question should not be included in the calculation, briefly justify your reasoning.
4) Calculate the dividend amount that will be shown in Diraster statement of changes in equity for the year ended 31 January 2010. If in your opinion any of the dividends in the question should not be included in the calculation, briefly justify your reasoning.
5) Calculate the net profit of Diraster for the year ended 31 January 2010.
6) Prepare the equity and liabilities section of Diraster statement of financial position as at 31 January 2010.
7) Calculate the total asset value of Diraster as at 31 January 2010.