follow the steps provided in each solution

FAC1601
ASSIGNMENT 3

SECOND SEMESTER
2024
BY: MTHOMBENI: 0767297208

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follow the steps provided in each solution

INSTRUCTIONS

1. Amounts are not the same for everyone

2. Subtitute the amounts provided to you in the formula

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follow the steps provided in each solution

Question 1
Answer saved
Marked out of 27.00

Question text
GreenFields Fertilizer Ltd is a company specialising in the production and distribution of high-quality fertilizers
for maize and other crops. The company operates a large manufacturing plant located in Broederstroom, North
West Province, where it produces a variety of fertilizers tailored to optimise soil nutrients and increase crop
yields. GreenFields Fertilizer Ltd has gained a significant presence in the agricultural sector and serves clients
across Southern Africa.
The company's financial year-end is 28 February, and it has consistently maintained strong financial
performance since its incorporation.

GREENFIELDS FERTILIZER LTD

EXTRACT OF BALANCES AS AT 28 FEBRUARY 2024:

R
Investments 385,700
Land and buildings at revaluation (1 March 2023) 1,119,300
Equipment at cost 658,400
Accumulated depreciation: Equipment 87,800
Revaluation surplus (1 March 2023) 120,300
Inventory (1 March 2023) 46,100
Bank 137,400
Trade receivables control 283,400
Petty cash 8,100
Share capital: Ordinary shares (1 March 2023) 755,200
Retained earnings (1 March 2023) 280,800
Loan: Broederstroom Bank 125,400
SARS (income tax) (Dr) 35,400
Sales 3,205,000
Allowance for settlement discount granted 7,500
Carriage on purchases 22,500
Trade payables control 266,000
Income received in advance 8,300
Allowance for credit losses 7,300
Settlement discount granted 5,800
Auditor's remuneration 141,900
Carriage on sales 28,200

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follow the steps provided in each solution

Settlement discount received 2,500

Purchases 304,900
Salaries and wages 379,300
Directors’ remuneration 200,000
Stationery 11,500
Telephone 16,500

Additional information:

1. The income tax for the financial year ended 28 February 2024 amounted to R138,800 and must still be
recorded.
2. The revaluation of land for the current year resulted in a revaluation surplus amounting to R114,400.
3. A provision of R53,300 must still be made for depreciation on equipment.
4. Directors made the following resolutions at year-end, which are yet to be recorded:
 Dividends declared at R1.4 per share and will be paid at the end of April 2024.
 A total bonus amounting to R163,000 must be paid to directors on 30 April 2024.
5. The loan from Broederstroom Bank was acquired on 1 March 2023 at an interest rate of 10% per annum.
Interest on all loans for the current financial year has not yet been accounted for. The loan is repayable in
five (5) annual equal instalments with effect from 1 March 2024.
6. Authorised share capital consists of 1000,000 NPV ordinary shares. Share capital stated above consists of
ordinary shares issued at R4.00 per share. On 01 December 2023, the directors issued 50,000 shares at R5.4
per share. The shares were taken up by the public on 27 February 2024, and this transaction has not been
recorded.
7. Inventory on 28 February 2024 consisted of the following:
 Inventory (stock) on hand: R45,500
 Stationery on hand: R5,100
8. The allowance for credit losses must be adjusted to R8,400. A debtor who owes the business R12,200 was
declared insolvent and must be written off as irrecoverable.
9. Investments consist of
 Investment in Mkhaya Institute (Pty) Ltd at a cost of R140,000 – this investment is measured at cost.
 17,550 shares in Mkhuluwa Ltd at fair value on 28 February 2023 – this investment is held for
trading and the fair value gain/losses are recognised in profit or loss. These shares were trading at
R15.5 per share on 28 February 2024. On the 27th of February 2024, Mkhuluwa Ltd declared a
dividend of R4.5 per share.

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follow the steps provided in each solution

REQUIRED:
Complete the amounts in the EXTRACT (presented below) of the statement of profit or loss and other
comprehensive income of Greenfields Fertilizers CC for the year ended 28 February 2024.

GREENFIELDS FERTILIZERS CC
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR
ENDED 28 FEBRUARY 2024

Revenue 3191700
(sales – settlement discount granted – allowance for settlement discount granted )
Cost of sales -325500
Inventory (opening balance) it’s given on the table 46100
Purchases ( Purchases – Settlement discount received ) 302400
Carriage on purchases – it’s given on the table 22500
Inventory (closing) information 7) -45500

Gross profit (Revenue – Cost of sales ) 2866200

Other income (add both amounts below) 105300

Fair value adjustment: Listed share investment (see calculation 1) 26325
Dividend income: Listed share investment (17550 X R4.5 info 9 ) 78795

Distribution, administrative and other expenses – add all accounts below -1024900
Salaries and wages
Director's remuneration 363000
(200 000 given on the table and might be different for everyone + 163 000 on info 4)
Auditor's remuneration 141900
Credit losses (see calculation 2 ) 13300
Depreciation – it’s not the same for everyone 53300
Carriage on sales 282000
Stationery consumed (11 500 given on the table – 5 100 on information 7) it’s not the same 6400
Telephone expenses 165000

Finance costs -12540

Interest on loan (loan amount on the table X 10%) -12540

Profit before tax (see calculation 3 ) 1934060

Income tax expense information 1 and might not be the same -138800

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follow the steps provided in each solution

Profit for the year (profit before – profit after tax ) 1795260

Other comprehensive income for the year 114400

Revaluation surplus information 2 and might not be the same 114400

Total comprehensive income for the year 1909660

( profit for the year + Other comprehensive income )

Calculations

1. Fair value adjustment : Listed shares

Investment given on the table – R140 000 on information 9 = Answer 1

17550XR15.50 on information 9 = R272 025
Answer 1 – R272 025 = final answer

In this example , this is how I worked out my answer

R385 700 – R140 000 = R245 700

17550 X R15.50 = R272 025
R245 700 – R272 025 = R26325

PLEASE NOTE THAT THE INVESTMENT AMOUNT GIVEN ON THE TABLE IS DIFFERENT FOR
EVERYONE SO JUST SUBTITUTE IT ON THE FORMULA

2. Credit losses

Table and Information 8

Allowance for credit losses on information 8 8 400

Allowance for credit losses on the table – its not the same for everyone (7 300)
1 100
Credit losses on information 8 12 200
Final answer (1 100 + 12 200) 13 300

3. Profit before tax

Gross profit 2 866 200

+ Other income 105 300
-Distribution , administration and other expenses -1 024 900
-Finance costs -12 540
1 934 060

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follow the steps provided in each solution

Question 2
Answer saved
Marked out of 2.00
Question text
GreenFields Fertilizer Ltd is a company incorporated in 2023, specialising in the production and sale of high-
performance fertilizers for maize and other crops. The company has grown steadily over the years due to its
innovative approach in developing sustainable fertilizers tailored to improve crop yield and soil health. Operating
out of a state-of-the-art production facility in Broederstroom, North West Province, GreenFields Fertilizer Ltd serves
farmers and agricultural enterprises across South Africa. The company prides itself on strong research and
development capabilities, ensuring its products are aligned with the latest advancements in agricultural science.

The company's authorised share capital includes 1,300,000 NPV ordinary shares and 650,000 10% preference shares
of R5.9 each. GreenFields Fertilizer Ltd has consistently demonstrated financial prudence, leading to robust
shareholder returns.

The company financial year end is 28 February.

Below are the share transactions recorded for GreenFields Fertilizer Ltd since its incorporation:

 On 1 March 2023, 99,500 ordinary shares were issued to subscribers at R6.5 per share.

 On 5 April 2023, 184,000 ordinary shares and 194,000 10% preference shares were issued to the public at R7.9
each and R6.3 each, respectively.

 On 15 January 2024, the share capital for ordinary shares increased by R1,947,500. These shares were issued at
R9.5 each.

 On 1 June 2024, 74,000 10% preference shares were issued at R11.8 each.

On 31 May 2024, the directors approved a capitalisation issue of 2 shares for every 5 ordinary shares held at R6.9
per share.

On 31 August 2024, the board of GreenFields Fertilizer Ltd declared an interim ordinary dividend of R1.5 per share
payable during November 2024. The company met the liquidity and solvency requirements, and on 1 December
2024, payment was made to the shareholders in respect of the dividends.

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follow the steps provided in each solution

Assume that the total number of shares issued before the capitalisation and the capitalisation shares issued is
500 000 and 300 000 respectively. Calculate the correct amount of ordinary share dividend by GreenFields
Fertilizer Ltd on 31 August 2024?

Answer: 1200000

Instructions and calculations

 The amounts that I have highlighted in yellow are different for everyone
 Subsitute and apply the formula

500 000 + 300 000 = 800 000

800 000 X R1.50 = 1 200 000

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follow the steps provided in each solution

Question 3
Answer saved
Marked out of 5.00

Question text
GreenFields Fertilizer Ltd is a company incorporated in 2023, specialising in the production and sale of high-
performance fertilizers for maize and other crops. The company has grown steadily over the years due to its
innovative approach in developing sustainable fertilizers tailored to improve crop yield and soil health. Operating
out of a state-of-the-art production facility in Broederstroom, North West Province, GreenFields Fertilizer Ltd serves
farmers and agricultural enterprises across South Africa. The company prides itself on strong research and
development capabilities, ensuring its products are aligned with the latest advancements in agricultural science.

The company's authorised share capital includes 1,300,000 NPV ordinary shares and 650,000 10% preference shares
of R5.9 each. GreenFields Fertilizer Ltd has consistently demonstrated financial prudence, leading to robust
shareholder returns.

The company financial year end is 28 February.

Below are the share transactions recorded for GreenFields Fertilizer Ltd since its incorporation:

 On 1 March 2023, 99,000 ordinary shares were issued to subscribers at R6.5 per share.

 On 5 April 2023, 184,000 ordinary shares and 190,000 10% preference shares were issued to the public at R7.9
each and R6.3 each, respectively.

 On 15 January 2024, the share capital for ordinary shares increased by R1,947,500. These shares were issued at
R9.5 each.

 On 1 June 2024, 74,000 10% preference shares were issued at R11.8 each.

On 31 May 2024, the directors approved a capitalisation issue of 2 shares for every 5 ordinary shares held at R6.9
per share.

On 31 August 2024, the board of GreenFields Fertilizer Ltd declared an interim ordinary dividend of R1.5 per share
payable during November 2024. The company met the liquidity and solvency requirements, and on 1 December
2024, payment was made to the shareholders in respect of the dividends.
Calculate the correct amount of preference share dividend by GreenFields Fertilizer Ltd on 31 August 2024?
Instructions and calculations

 The amounts that I have highlighted in yellow are different for everyone
 Subsitute and apply the formula

190 000 X R0.63 (10% of the issue price) = 119 700

74 000 X R1.18 (10% of the issue price) X 3/12 =21 830 this calculation is the same for everyone
119 700 + 21 830 = 141 530

Answer: 141530

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follow the steps provided in each solution

Question 4
Answer saved
Marked out of 2.00

Question text
GreenFields Fertilizer Ltd is a company incorporated in 2023, specialising in the production and sale of high-
performance fertilizers for maize and other crops. The company has grown steadily over the years due to its
innovative approach in developing sustainable fertilizers tailored to improve crop yield and soil health. Operating
out of a state-of-the-art production facility in Broederstroom, North West Province, GreenFields Fertilizer Ltd serves
farmers and agricultural enterprises across South Africa. The company prides itself on strong research and
development capabilities, ensuring its products are aligned with the latest advancements in agricultural science.

The company's authorised share capital includes 1,300,000 NPV ordinary shares and 650,000 10% preference shares
of R5.9 each. GreenFields Fertilizer Ltd has consistently demonstrated financial prudence, leading to robust
shareholder returns.

The company financial year end is 28 February.

Below are the share transactions recorded for GreenFields Fertilizer Ltd since its incorporation:

 On 1 March 2023, 99,500 ordinary shares were issued to subscribers at R6.5 per share.

 On 5 April 2023, 184,000 ordinary shares and 194,000 10% preference shares were issued to the public at R7.9
each and R6.3 each, respectively.

 On 15 January 2024, the share capital for ordinary shares increased by R1,947,500. These shares were issued at
R9.5 each.

 On 1 June 2024, 74,000 10% preference shares were issued at R11.8 each.

On 31 May 2024, the directors approved a capitalisation issue of 2 shares for every 5 ordinary shares held at R6.9
per share.

On 31 August 2024, the board of GreenFields Fertilizer Ltd declared an interim ordinary dividend of R1.5 per share
payable during November 2024. The company met the liquidity and solvency requirements, and on 1 December
2024, payment was made to the shareholders in respect of the dividends.

Assume that the total number of capitalisation shares issued is 300 000. Calculate the correct value of the
capitalisation shares to be issued by GreenFields Fertilizer Ltd on 31 July 2024?

Instructions and calculations

 The amounts that I have highlighted in yellow are different for everyone
 Subsitute and apply the formula

300 000 X R6.9 = 2 070 000

Answer: 2070000

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follow the steps provided in each solution

Question 5
Answer saved
Marked out of 2.00

Question text
GreenFields Fertilizer Ltd is a company incorporated in 2023, specialising in the production and sale of high-
performance fertilizers for maize and other crops. The company has grown steadily over the years due to its
innovative approach in developing sustainable fertilizers tailored to improve crop yield and soil health. Operating
out of a state-of-the-art production facility in Broederstroom, North West Province, GreenFields Fertilizer Ltd serves
farmers and agricultural enterprises across South Africa. The company prides itself on strong research and
development capabilities, ensuring its products are aligned with the latest advancements in agricultural science.

The company's authorised share capital includes 1,300,000 NPV ordinary shares and 650,000 10% preference shares
of R5.9 each. GreenFields Fertilizer Ltd has consistently demonstrated financial prudence, leading to robust
shareholder returns.

The company financial year end is 28 February.

Below are the share transactions recorded for GreenFields Fertilizer Ltd since its incorporation:

 On 1 March 2023, 99,000 ordinary shares were issued to subscribers at R6.5 per share.

 On 5 April 2023, 184,000 ordinary shares and 190,000 10% preference shares were issued to the public at R7.9
each and R6.3 each, respectively.

 On 15 January 2024, the share capital for ordinary shares increased by R1,947,500. These shares were issued at
R9.5 each.

 On 1 June 2024, 74,000 10% preference shares were issued at R11.8 each.

On 31 May 2024, the directors approved a capitalisation issue of 2 shares for every 5 ordinary shares held at R6.9
per share.

On 31 August 2024, the board of GreenFields Fertilizer Ltd declared an interim ordinary dividend of R1.5 per share
payable during November 2024. The company met the liquidity and solvency requirements, and on 1 December
2024, payment was made to the shareholders in respect of the dividends.

Assume that the total number of ordinary shares issued before the capitalisation is 550 000. Calculate the
correct number of capitalisation shares to be issued by GreenFields Fertilizer Ltd on 31 May 2024?
Instructions and calculations

 The amounts that I have highlighted in yellow are different for everyone
 Subsitute and apply the formula

550 000 X 2 /5 = 220 000

Answer: 220000

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follow the steps provided in each solution

Question 6
Answer saved
Marked out of 2.00

Question text
GreenFields Fertilizer Ltd is a company incorporated in 2023, specialising in the production and sale of high-
performance fertilizers for maize and other crops. The company has grown steadily over the years due to its
innovative approach in developing sustainable fertilizers tailored to improve crop yield and soil health. Operating
out of a state-of-the-art production facility in Broederstroom, North West Province, GreenFields Fertilizer Ltd serves
farmers and agricultural enterprises across South Africa. The company prides itself on strong research and
development capabilities, ensuring its products are aligned with the latest advancements in agricultural science.

The company's authorised share capital includes 1,300,000 NPV ordinary shares and 650,000 10% preference shares
of R5.9 each. GreenFields Fertilizer Ltd has consistently demonstrated financial prudence, leading to robust
shareholder returns.

The company financial year end is 28 February.

Below are the share transactions recorded for GreenFields Fertilizer Ltd since its incorporation:

 On 1 March 2023, 99,000 ordinary shares were issued to subscribers at R6.5 per share.

 On 5 April 2023, 184,000 ordinary shares and 190,000 10% preference shares were issued to the public at R7.9
each and R6.3 each, respectively.

 On 15 January 2024, the share capital for ordinary shares increased by R1,947,500. These shares were issued at
R9.5 each.

 On 1 June 2024, 74,000 10% preference shares were issued at R11.8 each.

On 31 May 2024, the directors approved a capitalisation issue of 2 shares for every 5 ordinary shares held at R6.9
per share.

On 31 August 2024, the board of GreenFields Fertilizer Ltd declared an interim ordinary dividend of R1.5 per share
payable during November 2024. The company met the liquidity and solvency requirements, and on 1 December
2024, payment was made to the shareholders in respect of the dividends.

Calculate the correct total number of ordinary shares issued by GreenFields Fertilizer Ltd as at 30 June 2024?

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follow the steps provided in each solution

Instructions and calculations

 The amounts that I have highlighted in yellow are different for everyone
 Subsitute and apply the formula

Ordinary shares
1 March 2023 bullet point 1 (different for everyone ) 99 000
5 April 2023 bullet point 2 (same for everyone) 184 000
15 January 2024 (R1 947 500/R9.50) (same for everyone) 205 000
Total ordinary shares before capitalisation 488 000
Capitalisation (488 000 X 2/5) 195 200
Total number of ordinary shares issued (488 000 + 195 200) 683 200

Answer: 683200

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follow the steps provided in each solution

Question 7
Answer saved
Marked out of 34.00

Question text
GreenFields Fertilizer Ltd is a company specialising in the production and distribution of high-quality fertilizers
for maize and other crops. The company operates a large manufacturing plant located in Broederstroom, North
West Province, where it produces a variety of fertilizers tailored to optimise soil nutrients and increase crop
yields. GreenFields Fertilizer Ltd has gained a significant presence in the agricultural sector and serves clients
across Southern Africa.
The company's financial year-end is 28 February, and it has consistently maintained strong financial
performance since its incorporation.

GREENFIELDS FERTILIZER LTD

EXTRACT OF BALANCES AS AT 28 FEBRUARY 2024:

R
Investments 368,150
Land and buildings at revaluation (1 March 2023) 1,120,100
Equipment at cost 657,600
Accumulated depreciation: Equipment 88,600
Revaluation surplus (1 March 2023) 119,500
Inventory (1 March 2023) 46,900
Bank 136,600
Trade receivables control 284,200
Petty cash 7,300
Share capital: Ordinary shares (1 March 2023) 756,000
Retained earnings (1 March 2023) 280,000
Loan: Broederstroom Bank 126,200
SARS (income tax) (Dr) 34,600
Sales 3,205,800
Allowance for settlement discount granted 6,700
Carriage on purchases 23,300
Trade payables control 265,200
Income received in advance 7,500
Allowance for credit losses 6,500
Settlement discount granted 5,000
Auditor's remuneration 141,100
Carriage on sales 29,000
Settlement discount received 1,700
Purchases 305,700
Salaries and wages 378,500
Directors’ remuneration 200,800
Stationery 10,700
Telephone 17,300

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Additional information:

1. The income tax for the financial year ended 28 February 2024 amounted to R137,700 and must still be
recorded.
2. The revaluation of land for the current year resulted in a revaluation surplus amounting to R118,400.
3. A provision of R59,300 must still be made for depreciation on equipment.
4. Directors made the following resolutions at year-end, which are yet to be recorded:
 Dividends declared at R1.4 per share and will be paid at the end of April 2024.
 A total bonus amounting to R163,000 must be paid to directors on 30 April 2024.
5. The loan from Broederstroom Bank was acquired on 1 March 2023 at an interest rate of 10% per annum.
Interest on all loans for the current financial year has not yet been accounted for. The loan is repayable in
five (5) annual equal instalments with effect from 1 March 2024.
6. Authorised share capital consists of 1000,000 NPV ordinary shares. Share capital stated above consists of
ordinary shares issued at R4.00 per share. On 01 December 2023, the directors issued 50,000 shares at R5.4
per share. The shares were taken up by the public on 27 February 2024, and this transaction has not been
recorded.
7. Inventory on 28 February 2024 consisted of the following:
 Inventory (stock) on hand: R54,000
 Stationery on hand: R5, 100
8. The allowance for credit losses must be adjusted to R8,400. A debtor who owes the business R12,200 was
declared insolvent and must be written off as irrecoverable.
9. Investments consist of
 Investment in Mkhaya Institute (Pty) Ltd at a cost of R140,000 – this investment is measured at cost.
 17,550 shares in Mkhuluwa Ltd at fair value on 28 February 2023 – this investment is held for
trading and the fair value gain/losses are recognised in profit or loss. These shares were trading at
R15.5 per share on 28 February 2024. On the 27th of February 2024, Mkhuluwa Ltd declared a
dividend of R4.5 per share.

10. Assume the correct amount of total comprehensive income for the year is R600,000.

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REQUIRED:
Complete the amounts in the EXTRACT (presented below) of the statement of financial position of
Greenfields Fertilizers Ltd at 28 February 2024.

GREENFIELDS FERTILIZERS Ltd

STATEMENT OF FINANCIAL POSITION AT 28 FEBRUARY 2024

ASSETS
Non-current assets (add both accounts below) 1888200
Property, plant and equipment (see calculation 1 ) 1748200
Investments - Unlisted 140000

Current assets (add all accounts below) 817600

Inventories (add both amounts on information 7) 59100
Trade and other receivables (see calculation 2 ) 342575
Cash and cash equivalents (bank and petty cash ) 143900
Listed share investment (17550 X R15.5) – information 9 272025

Total assets 2705800

EQUITY AND LIABILITIES

Total equity 2143900

Share capital (756 000 + 270 000 [50 000XR5.4 info 6] 1026000
Retained earnings (Balance on the table + 600 000 on information 10) 880000
Other components of equity (Revaluation surplus on the table + info 2) 237900

Total liabilities (total assets – total equity ) 561900

Non-current liabilities 100960

Long-term borrowings (Loan amount X4/5) 100960

Current liabilities (total liabilities – non current liabilities) 460940

Trade and other payables (Trade payables + Income received in advance ) 272700
Dividends payable (Ordinary share capital on the table / R4 X R1.40) 264600
Current tax payable ( info 1 – SARS Income tax (dr) given on the table 103100
Current portion of long-term loan (Loan amount X1/5) 25240

Total equity and liabilities same amount as your total assets 2705800

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Calculations

1. Property, plant and equipment

Land and buildings 1 120 100

Equipment at cost 657 600
Revaluation surplus ( info 2) 118 400
Accumulated depreciation on equipment (88 600)
Depreciation (info 3 and its ) (59 300)
1 748 200

2. Trade and other receivables

Trade receivables control 284 200

Allowance for credit losses (info 8) (8 400)
Credit losses (info 8) (12 200)
Dividends receivable (info 9) 78 975
17 550 X R4.5
342 575

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Question 8
Answer saved
Marked out of 21.00

Question text
Greenfields Fertilizers CC is a fertilizer manufacturing company operating around Broederstroom in the
Northwest Province (in the Witwatersrand, the southern foothills of the Magaliesberg). Raynard
and Dikeledi are the two founders and members of this registered close corporation, and they obtained
municipal approval to expand the business into producing and distributing fertilizers for maize and other
crops.

The following EXTRACT of balances as at 31 December 2023 from the accounting records of
Greenfields Fertilizers CC is presented to you for assistance:
R
Loan to Raynard 23,000
Member’s contribution: Raynard 232,000
Member’s contribution: Dikeledi 195,200
Retained earnings (1 January 2023) (Dr) 505,000
Trade receivables control 202,700
Trade payables control 224,800
Loan from Raynard 150,000
Bank (favourable) 3,803,800
Long-term loan (Broederstroom Fund) 6,029,900
SARS (income tax) 157,700
Vehicles at cost 2,794,200
Accumulated depreciation: Vehicles (1 January 2023) 380,500
Machinery at cost 66,600
Accumulated depreciation: Machinery (1 January 2023) 23,800
Equipment at cost 1,862,900
Accumulated depreciation: Equipment (1 January 2023) 650,500
Inventory 1,273,200
Profit before tax (before taking into account the additional
3,766,000
information)

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Additional information
1. Depreciation for the year ended 31 December 2023 was correctly calculated as R93,000,
R6,800, and R210,000 for vehicles, machinery, and equipment, respectively.
2. The income tax assessment, received from SARS on 4 January 2024, indicated that the normal
income tax for the 2023 financial year amounted to R433,000.
3. The loan from Raynard was advanced to the CC in December 2022 and is repayable on 31
May 2024.
4. Dikeledi experienced personal financial problems during the year and borrowed R31,400 from
the close corporation. The loan was granted to Dikeledi on 1 November 2023 at an interest rate
of 21% per annum. The interest on this loan is capitalised. This transaction is still to be
recorded.
5. On 1 January 2023, an experienced agricultural scientist by the name of Peter was admitted to
the CC in July 2023 to assist in developing new fertilizer formulations for maize and other
crops. In addition to the R39,400 cash contribution, Peter further contributed laboratory
equipment and an old delivery vehicle to the value of R122,000 and R46,000, respectively.
6. On 1 September 2023, a profit distribution of R47,400 was made to each member of the close
corporation. These amounts should be regarded as loans from members with interest charged
and capitalised at 18% per annum. This transaction is yet to be accounted for.
7. On 30 June 2023, one of the fertilizer mixing machines (production equipment) got damaged by
an inexperienced technician from a local service company and was not repairable. This
machine was acquired at a cost of R102,000 on 1 May 2019 and had accumulated
depreciation of R60,400 on 30 June 2023 (R42,000 at 1 January 2023). The equipment was
insured, and an insurance pay-out at R41 600 more than the carrying amount of the equipment
was paid to the close corporation. The accountant credited the insurance pay-out to the SARS
(income tax) account.

REQUIRED:
Complete the amounts in the EXTRACT of the statement of changes in net investments of members for
Greenfields Fertilizers CC for the year ended 31 December 2023.

Instructions:

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follow the steps provided in each solution

Calculations

MEMBERS CONTRIBUTION

1. Balance at 1 January 2023

Add members contribution that are given on the table

232 000 + 195 200 = 427 200

2. Additional member contribution

Add all items on information 5

39 400 + 122 000 + 46 000 = 207 400

3. Balance at 31 December 2023

427 200 + 207 400

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RETAINED EARNINGS

1. Balance at 1 January 2023 – it’s given and should be recorded in brackets

2. Total comprehensive income

Profit before tax 3 766 000

Depreciation on information 1 (93 000 + 6 800 + 210 000) (309 800)
Income tax on information 2 (433 000)
Reversal of insurance on information 7 (102 000 -60 400 + 41 600) (83 200)
Interest on loan from members (47 400X2 X 4/12X18%) info 6 (5 688)
Profit damage info 7 41 600
Interest on loan to members info 6 (31 400X2/12X21%) 1099
2 977011

I made an error on the picture above for the total comprehensive income

3. Distribution to members

Information 6
47 400 X 2 = 94 800

4. Balance at 31 December 2023

Total comprehensive income - Balance at 1 January 2023 - Distribution to members

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