Diraster Ltd (‘Diraster’) is a hedge fund that is listed on the JSE Ltd with a 31 January year end. Diraster
researches various investment options on behalf of clients and invests their money according to their
preferences. Massief Diraster, the CEO and founder of Diraster, has never been very good at the
administration and accounting side of the business and often loses documents. He has approached you for
help, but ca only offer you certain information.
Trial balance extract at 31 January 2009
Note Debit Credit
Long – term loan 4 4 500 000
Interest payable 4 350 625
Application and allotment 1 5 382 000
Shareholders for ordinary dividend 2 60 000
Shareholder for preference dividend 3 ?
Stated capital (2 000 000 ordinary shares) 1 8 000 000
Preference share capital 3 ?
Retained earnings – closing balance 25 988 000Page 17 of 21
1) 754 000 ordinary shares were issued on 28 February 2009. R120 000 was returned to application
due to an oversubscription.
2) The underwriter was paid commission of 2%.
3) Diraster accounting policy with respect to share issue costs is to minimise distributable reserves.
4) Underwriting commission was not accrued in the previous final year.
5) The dividend payable from the previous financial year was settled on 3 February 2009.
6) Diraster declared and paid an ordinary interim dividend of 7 cents per share on 15 February 2009
and declared a final dividend of 5 cents per share on 30 January 2010.
7) The final dividend was paid on 3 February 2010.
8) Diraster had issued 30 000, R3, 6% cumulative preference shares on 1 February2007.
9) Preference shares have never been issued at a premium.
10) If declared, preference dividends are paid on 1 February.
11) The R60 000 ordinary dividend of the prior financial year was the first dividend ever to be
declared by Diraster.
12) The long- term bears simple interest at 8, 5% on the outstanding balance.
13) Two capital repayments of R700 000 and R800 000 were made on 31 June 2009 and 31
December 2009 respectively.
14) Interest is payable annually on 28 February.
15) The net profit in the income statement is started at R7 654 000 for the year ended 31 January
16) This is before any of the above information has been taken into account.
1) Calculate the price at which each ordinary share was issued in the current year. (3 Marks)
2) Prepare all the journal entries that should be processed in the 2010 financial year that relate to the
share issue. (4 Marks)
3) Calculate the dividends paid to ordinary and preference shareholders during the year ended 31
January 2010. If in your opinion any of the dividend in the question should not be included in the
calculation, briefly justify your reasoning. (7 Marks)
4) Calculate the dividend amount that will be shown in Diraster statement of changes in equity for
the year ended 31 January 2010. If in your opinion any of the dividends in the question should not
be included in the calculation, briefly justify your reasoning. (6 Marks)
5) Calculate the net profit of Diraster for the year ended 31 January 2010. (7 marks)
6) Prepare the equity and liabilities section of Diraster statement of financial position as at 31
January 2010. (6 marks)
7) Calculate the total asset value of Diraster as at 31 January 2010. (2 marks)