Practical Solution – Week 1 (Part B)

UNIVERSITY OF JOHANNESBURG
COLLEGE FOR BUSINESS AND ECONOMICS
DEPARTMENT OF COMMERCIAL ACCOUNTING
FAC22A2 2024

a) Prepare Lion Limited’s statement of changes in equity for the year ended 31
December 2013.
Comparative figures are required

LION LIMITED
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 December 2013 *
Ordinary Preference Retained Total
share share earnings
capital capital
R R R R
Opening Balance 1 800 000 ^ 800 000 ^ 10 000 000 ^ 12 600 000 ^
at 1 January 2012
Share issue on 1 720 0001  - - 720 000 ^
July 2012
Total - - 900 000 ^ 900 000 ^
comprehensive
income/Profit for
the year
Preference - - (96 000) 2 (96 000) ^
dividend declared
Balance at 31 2 520 000 800 000 10 804 000 14 124 000
December 2012
Total - - 1 500 000  1 500 000 ^
comprehensive
income /Profit for
the year
Ordinary dividend - - (120 000) 3 (120 000) ^
declared
Preference - - (96 000) 4^ (96 000) ^
dividend declared


Balance at 31 2 520 000 ^P 800 000^P 12 088 000 ^P 15 408 000

December 2013 ^P
 Note regarding formatting of the statement of changes in equity
- If comparatives are needed for a statement of changes in equity (SOCE) they are not presented in
the same way as they would in the statement of financial position (SFP) and statement of
comprehensive income (SCI).
- The SOCE starts with the prior year ends balances and ends with the current year ends balances
- The statement of changes in equity is presented horizontally and not vertically like the SFP and
SCI.
- The SCI and SFP start with the current year’s coloumn and they are presented next to the prior
years coloumn.

Calculation:
1
R400 000 X1.80=R720 000
2
R800 000X12% = R96 000
3
2 400 000 XR0.05=R120 000
4
R800 000X12% = R96 000
 b) Prepare the note to the financial statement for inclusion in Lion Limited’s notes to the
financial statement for the year ended 31 December 2013.

LION LIMITED
NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2013

5. Ordinary and preference share capital note

Authorised

5 000 000 ordinary shares of no par value. 

200 000 12% redeemable preference shares of no par value


Issued
2 400 000 ordinary shares of no par value
200 00, 12% preference shares of no par value

Reconciliation of number of shares

Ordinary Preference
Balance outstanding at 01 January 2012 2 000 000 ^ 200 000^
Share issue on 1 July 2012 400 000 ^ -^
Balance outstanding 31 December 2012 2 400 000 200 000
Shares redeemed on 17 December 2013 - (100 000)^
Balance outstanding at 31 December 2013 2 400 000 ^ 100 000 ^

c) Prepare Lion Limited’s statement of financial position as at 31 December 2013.

Comparative figures are required

Extract of the statement of financial position of Lion Limited as at 31

DECEMBER 2013

Note 2013 2012

EQUITY AND LIABILITIES

Issued share capital and reserves 15 408 000^ 14 124 000^

Ordinary share capital 2 520 000^ 2 520 000^

Redeemable preference 800 000^ 400 000^

shares
Retained earnings/income 12 088 000^ 10 804 000^