Prepare the Statement of changes in Equity for the year ended 29 February 2020 for Velocity Ltd. The total column is required.

Question 1 (Marks: 35)
Fut and Ball are partners in a sports event organisation business called Futball Events.
They share profits and losses in the ratio 1:3 respectively.
Fut and Ball have decided to dissolve the partnership on 30 June 2020, to take up international
positions in Greece.
The following information was provided by the bookkeeper:
List of balances as at 29 June 2020: Debits Credits
Capital: Fut 100 000
Capital: Ball 300 000
Current Account: Fut 138 500
Current Account: Ball 87 000
Drawings: Fut 117 000
Drawings: Ball 198 000
Profit and Loss 523 380
Goodwill 50 000
PPE 480 000
Bank 185 000
Receivables 45 000
Payables 85 120
Income received in advance 15 000
Additional Information, still to be recorded for 30 June 2020:
1. All the PPE was sold for R 418 000, but only R 398 000 was transferred into the bank
account. The difference was commission paid for the sale.
2. The income received in advance had to be refunded in full.
3. Receivables were all collected, less 5% settlement discount granted.
4. Payables were negotiated and settled by paying R 70 010.
5. The partnership agreement only stipulates that partners each receive a R 120 000 salary per annum. This has not yet been taken into account.
Required:
Q.1.1 Prepare the following accounts to record the dissolution of the partnership in the General Ledger of Futball Events for the 30 June 2020.
Realisation account.
Bank account.
Capital accounts (Fut and Ball) – in columnar format. (35)
Question 2 (Marks: 35)
Fix Ltd is a public listed company involved in the manufacture of adhesives. Fix Ltd has an authorised
share capital of 5 000 000 shares and an authorised 10% preference share capital of 800 000.
During 2018, the first year of incorporation, the directors of the company took up 10% of the authorised ordinary shares and the public another 30%.
ALL preference share capital still remains unissued.
The following share transactions took place during the 2019 financial year:
25 January: 500 000 10% preference shares were sold and receipted to National Bank at R 10 per share.
31 January: The 500 000 10% preference shares were allotted.
07 March: It was agreed that half of the remaining authorised ordinary share capital would be issued to the public for a compensation of R 9 000 000. This transaction will be underwritten by Exchange Underwriters for a commission of 5%.
15 March: Applications closed and 1 000 000 applications were received and receipted.
25 March: All ordinary shares were allotted and the transactions with the underwriter completed and paid.
31 December: A final dividend of R0,80 per ordinary share was declared.
Required:
Q.2.1 Complete all the share transactions in the General Journal of Fix Ltd for the financial year end 31 December 2019. Ignore journal narrations.
(27)
Q.2.2 Name and discuss two other types of share issues other than to the public. (8)
Question 3 (
Dovelly Ltd is a business operating in the mining sector and has recently expanded their market which required an additional investment in PPE. The following information relates to Dovelly Ltd:
Trial Balance at year end 30 June 2020:
R ‘000 R ‘000
CREDITS: 2020 2019
Ordinary Share Capital 15 900 11 521
Retained Earnings beginning of financial year 3 290 1 069
Long term loan 12% : FBN Bank 2 829 3 480
Accumulated depreciation on Equipment 2 270 890
Accumulated depreciation on Vehicles 930 610
Allowance for Credit losses 140 100
Payables 899 645
Rental payable 135 130
Dividends payable 0 634
Bank overdraft 756 0
SARS (tax payable) 1 528 1 808
Revenue 24 789 19 567
Dividends received 61 59
Interest received 11 49
DEBITS:
Equipment at cost 11 500 7 800
Vehicles at cost 4 789 3 590
Land and Buildings 8 320 0
Investment at cost price 889 973
Receivables 1 950 2 349
Provision for Credit Losses 569 619
Inventory 4 588 1 987
Provisional tax payments 1 789 1 508
Bank 0 4 916
Cost of sales 9 875 8 290
Loss on sale of Equipment 128 0
Rental expense 1 378 1 312
Depreciation 950 810
Credit Losses 356 450
Administration and distribution expenses 3 892 3 459
Interest on long term loan 301 379
Interest on overdraft 41 0
Company income tax @ 28% 2 223 2 120
Additional Information:
1. Equipment with a cost price of R 1 500 000 and R 150 000 accumulated depreciation was
sold during the year.
2. New equipment, vehicles and buildings were acquired during the year to facilitate
expansion.
3. On the 30 June 2020, dividends of R 980 000 were declared. This transaction has not yet
been processed. The dividends will be paid on the 18 July 2020.
4. All sales and purchases are made on credit.
5. Profit before tax was calculated correctly from the information above and is
R 7 940 000.
Required:
Q.3.1 Prepare the Statement of Cash Flows of Dovelly Ltd for the year ended 30 June
2020 using the indirect method.

Q.3.2 Define the Going concern principle when preparing the Cash Flow Statement (3)
Q.3.3 Included in administration and distribution expenses is repairs to the boundary
fence of the property, for R 380 000, paid in cash. Motivate with reference to the
Conceptual Framework, why the repairs to the fence should be recognised as an
expense.

Question 4 (Marks: 65)
Velocity Ltd is a clothing company which manufactures and distributes under licence various well‐
known clothing brands.
The following information relates to Velocity Ltd:
Pre‐Adjustment Trial Balance as at 29 February 2020:
Debits Credits
Ordinary Share Capital – 1 March 2019 8 900 000
7% Preference Share Capital – 1 March 2019 1 200 000
Retained Earnings – 1 March 2019 1 890 000
Long term loan: ABN Bank 9% 1 200 000
Investment held for trading 1 500 000
Land and buildings 6 900 000
Equipment 3 879 000
Vehicles 2 890 000
Accumulated depreciation on buildings 480 000
Accumulated depreciation on equipment 885 000
Accumulated depreciation on vehicles 595 000
Inventory 2 919 452
Receivables 4 890 790
Provisional tax Payment (SARS) 420 000
Allowance for credit losses 250 000
Bank 489 090
Payables 5 890 245
SARS
Profit and Loss 2 598 087
Additional Information:
1. On 5 February 2020, the land was subdivided, and the subdivision sold for R 2 800 000. The transfer for the land took place on 27 February and the money was paid into the bank
account. The purchase price of the land, on 1 May 2015 was R 5 000 000. The subdivision sold amounts to one quarter of the original block. No transactions have been recorded for this transaction. The remaining land value must be revalued in accordance with this recent sale price.
Depreciation on buildings is calculated at 5% per annum on cost. No changes to the
buildings occurred during the financial year. Depreciation was correctly recorded.
2. During October 2019 additional ordinary shares were issued and the transactions
concluded on the 1 November 2019. The proceeds from ordinary shares amounted to
R 1 800 000 and will be used during the next financial year for the replacement of
equipment. The money received was invested in a 7% fixed deposit at Denbank. No
transactions, including interest received, have been recorded for this transaction.
3. The Investment held for trading was re‐valued on the 25th of February 2020, by an increase of R120 000. No transactions have been recorded.
4. The long‐term loan from ABN Bank was granted on 1 March 2018 and is repayable over five years, in equal end of month instalments.
5. On 25 February an ordinary final dividend was declared, R 800 000. No interim dividends were declared or paid in the current financial year. No transactions have been recorded.
6. Provide for a 28% tax expense on Profit before tax, payable in March 2020.
Required:
Q.4.1 Prepare the Statement of changes in Equity for the year ended 29 February 2020
for Velocity Ltd. The total column is required.
Q.4.2 Prepare the PPE note for the year ended 29 February 2020, showing only Land and Buildings.

Q.4.3 Prepare the Statement of Financial Position as at 29 February 2020 for Velocity Ltd.

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