Question 20.

19
Waterkloof Ltd, a listed company, was registered in 20.0 with a share capital of R500 000
which is divided as follows:
• 250 000 ordinary shares of R1,00 each
• 250 000 9% redeemable preference shares of R1,00 each
The issued share capital at the end of 20.0 was as follows:
• 200 000 ordinary shares of R1,05 each
• 80 000 9% redeemable preference shares of R1,00 each
The redeemable preference shares are redeemable at R1,25 each. The following
information was available on 28 February 20.2:
TRIAL BALANCE
ON 28 FEBRUARY 20.2
Dr Cr
R R
7% Debentures (issued 1 March 20.1) 40 000
9% Preference shares 80 000
Share premium 10 000
Purchases 246 600
Plant and equipment at cost (1 March 20.1) 380 000
Administrative expenditure 28 600
General reserve 18 000
Debtors 72 000
Property taxes 480
Ordinary shares 200 000
Investments at cost 30 000
Revenue from investments 2 000
Goodwill at carrying value 50 000
Cash 473 900
Creditors 152 000
Commission expenses 50 000
Distribution costs 70 000
Wages and salaries 37 000
Retained earnings (1 March 20.1) 43 880
Auditors remuneration 1 500
Sales 888 200
Inventories (1 March 20.1) 94 800
Allowance for credit losses 4 800
Accumulated depreciation on plant and equipment (1 March
20.1) 96 000
1 534 880 1 534 880
The following still has to be taken into account in the above trial balance:
1. Depreciation must be provided for at 20% at the fixed instalment method on plant and
equipment.
2. The preference share dividend as well as an 11c dividend on ordinary shares has been
declared.
3. R1 400 interest on debentures that was payable is included in administrative
expenditure.
4. The managing director’s salary of R20 000 is included in administrative expenditure.
Rent paid for the storeroom amounting to R1 000 was also included in administrative
expenditure.
5. Closing inventory is R99 680 on the FIFO method of valuation.
6. The debenture is secured by the plant and is redeemable on 28 February 20.5.
7. The investment consists of 7 500 ordinary shares of R3,00 each in Neptunis (Pty) Ltd.
The directors’ valuation is R38 000. Neptunis (Pty) Ltd has issued 50 000 ordinary
shares.
8. R10 000 must be transferred to the general reserve.
9. Taxes of R20 000 must be provided for.
10. The applicable tax rates are as follows:
• Withholding tax on dividends: 15%
• Company tax: 28%
No taxes have been paid at year-end.

Required:
1. Compile the statement of profit or loss and other comprehensive income of Water-
kloof Ltd for the year ended 28 February 20.2.
2. Compile the statement of financial position on 28 February 20.2.
3. Show all applicable notes to the financial statements, including the accounting policy.
The financial statements must be in accordance to the requirements of the new
Companies Act and with IFRS.
Ignore VAT and round off to the nearest rand.