REQUIRED: Prepare the Statement of Changes in Equity of Redfern Limited for the year ended 30 September 2020. The total column is not required.
QUESTION 4
Redfern Limited has stores in ten major cities across Namibia. In recent years, a major portion of their retail sales are made from orders on their website and from their catalogue that is sent to households across the nation. The company was incorporated in 1973 and has a 30 September yearend.
Redfern Limited has the following authorised share capital:
- 10 000 000 ordinary shares with no par value
- 2 500 000 10% preference shares at N$1.00 par value
- 300 000 12% convertible preference shares at N$1.50 par value
Redfern Limited
Trial Balance 30 September 2020
N$
N$
Share capital (2 400 000 shares)
10 065 000
10% preference shares (850 000 shares)
890 000
12% convertible preference shares (250 000 shares)
375 000
Share premium
235 000
Re-valuation reserve
3 525 000
Retained earnings 1 481 800
Land and buildings
32 390 000
Machinery and equipment
1 200 000
Accumulated depreciation – machinery & equipment430 000
Investments at cost
1 640 000
Inventories (30 September 2020)
1 750 000
Debtors
320 000
Allowance for credit losses
16 200
Bank overdraft
64 000
Mortgage loan
14 000 000
Provisional tax paid
2 010 000
Accrued interest on mortgage bond
1 960 000
Trade and other payables
145 000
Profit after tax
4 535 920
39 310 000
39 310 000
The following transactions occurred during the year and have already been accounted for in the above figures:
- On 1 February 2020 the board of directors allocated 300 000 ordinary shares at N$4.50 per share and 50 000 10% preference shares at N$1.80 per share.
- On 1 July 2020, Mr Yua, a sworn appraiser re-valued the land and buildings to their current market value. This was the first time the land and buildings had been re-valued.
- At the same time that the land and buildings were re-valued, the company took out an additional mortgage bond of N$600 000 at the same rate as their previous mortgage bond, being 14%. The company must pay capital repayments of N$560 000 plus interest payable on 1 July starting in 2021.
The following errors and omissions were discovered and still need to be accounted for:
- When recording the issue of the 10% preference shares, the accountant omitted to record the portion that relates to the share premium. The full amount of the shares issued was taken to the 10%
preference share account. - A final ordinary dividend of 80 cents per share was declared on the last day of the financial year, but has not yet been recorded. The dividend is payable on 25 October 2020.
- Immediately after the dividend was declared, the company was given approval to convert 75% of the 12% convertible preference shares to ordinary shares. The conversion price was N$4.50 per share. The 12% convertible preference shares were originally issued in 1990 at a price of N$1.80 per share.
- The investment account relates to an investment of 30 000 shares in Investment Limited. A final dividend of N$64 000, payable to Redfern Limited, was declared by Investment Limited and has not yet been recorded.
REQUIRED:
Prepare the Statement of Changes in Equity of Redfern Limited for the year ended 30 September 2020. The total column is not required.
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