ZANECA 26 MARKS

Zaneca Limited was incorporated on 18 June 2008 with a 30 June year end and an authorised share
capital of R15 000 000 consisting of:
1 000 000 ordinary no par value shares
780 000 8% cumulative redeemable no par value preference shares
200 000 9% non-cumulative convertible preference shares
During January 2013 the directors offered the following shares for application:
450 000 ordinary no par value shares at R15 each to the public
100 000 ordinary no par value shares at R12.50 each to existing shareholders
200 000 8% redeemable no par value preference shares at R5.50 each
20 000 10% debentures of R100 each

The closing date for the applications was on 25 March 2013.

The total issue, including the debentures, was underwritten by Lona Bank at a commission of 2% of
the issue price. The existing shareholders applied for all the shares offered to them and made
payment on 10 March 2013. The shares were allotted to them on the same day.

The following applications were received from the public:

Ordinary shares – 600 000 shares
Preference shares – 150 000 shares
Debentures – 1 000 debentures

By 25 March 2013 all relevant amounts were received and on 31 March 2013 the directors decided
the following:
 Allot the preference shares and debentures as per the applications.
 Ordinary shares are allotted to the public in the ratio of three shares for every four shares
applied for.
 All excess money was paid back on 1 April 2013.

The underwriter was paid on 3 April 2013 and on the same day Lona Bank fulfilled their obligations.

The total issue cost amounted to R15 000 and was paid on 10 April 2013. The company’s policy
regarding issue costs and underwriters commission is to utlise distributable reserves as far as
possible.

No other issue of shares took place during the year.

REQUIRED:

a. Journalise all the above-mentioned transactions for the year ended 30 June 2013 in order of
occurrence of the transaction. Provide separate journals for each type of application and
allotment. (23)

b. If the 8% redeemable preference dividend amounted to R180 000 for the year, calculate how
many shares were in issue at the beginning of the year. You may assume that the underwriter’s
dividend was not pro rata adjusted for April 2013, but that the full dividend for April 2013 was
declared. The original share issue price was R5 per share.
(3)
TAX 4 PUNTE

After a company made the two preliminary tax payments, amounting to R755 000 collectively, they
still owe R50 000 in income tax to SARS at the end of the current financial year. There were no
outstanding balances relating to income tax at the end of the prior financial year. The following
information was also obtained from the accountant:

Depreciation R90 000

Wear and tear R85 000
Dividends received R15 000
VAT control R25 000
Traffic fines R2 500

REQUIRED:

Calculate the company’s accounting profit before tax for the current financial year. (4)