UNIT 4: COMPANIES Examples and Activities Q.1 Shares Issued On 1 July 2016, A Limited offered 100000 ordinary shares at R1 each to the public. All the applications and payments were received and allotted. Required: Show the general journal entries for the above mentioned transactions. Date 2016 July 1 Share Application Account (money received from applicants for 100000 shares) Details Bank Share Application Account Ordinary Share capital Account (100000 ordinary shares allotted) Debit 100000 Credit 100000 100000 100000 Q.2 Shares Issued- excess application money received On 1 Sept 2016, Beta LTD offered 100000 ordinary shares at R1 each to the public. Applications for 110000 shares were received. The 100000 ordinary shares were allotted and the unsuccessful applications refunded. Required: Show the general journal entries for the above mentioned transactions. Date 2016 Sept 1 Share Application Account (money received from applicants for 110000 shares) Details Bank Share Application Account Ordinary Share capital Account (100000 ordinary shares allotted) Share Application Account Bank (10000 applications rejected and application money refunded) Debit 110000 Credit 110000 100000 100000 10000 10000 Q.3 Final Dividends Declared and paid On 28 Feb 2016, the Authorised and issued share capital of Gato Ltd consisted of the following:
Authorised Share Capital: 80000 shares of R1 each Issued share capital: 60000 shares of R1 each. On 28 Feb 2016 the directors declared a final dividend of 5c per ordinary share. The dividends declared on 28 Feb 2016 will be paid on 15 March 2016. Required: Show the general journal entries relating to this for both dates. Date 2016 Feb 28 March 15 Details Ordinary share dividends(60000 x 5c) Shareholders for dividends (final dividend declared) Appropriation Account Ordinary share dividends (closing entry) Shareholders for dividends Bank (final dividends paid) Debit 3000 3000 3000 Credit 3000 3000 3000 Q.4 Taxation On 1 March 2016, the capital position of Zuma LTD was as follows: Authorised capital, 300000 ordinary shares. Issued capital, 200000 ordinary shares @ R2 each. On 1 March 2016, the following credit balances, among others, appeared in the books of the company. · Retained Earnings R540000 · SARS: Income tax R1500 (Cr) The following transactions, regarding taxation and dividends, occurred during the financial year ended 28 Feb 2017: 2016 July 15 The income tax due in respect of the previous financial year was paid by cheque. 2016 Aug 25 The total provisional income tax liability of the company was estimated at R240000. A cheque for half of the amount was paid to SARS on 30 August. 2017 Feb 28 A cheque was issued to pay the rest of the provisional tax payable. The net income of the company before tax amounted to R940000. Provide for income tax at
the rate of 28%. The directors declared a final dividend of 5c per ordinary share. The directors decided to transfer R5000 to general reserve. Required: 4.1 Show the general journal entries for the above mentioned transactions: Date 2016 SARS: Income tax July 15 Bank (income tax credit balance settled) Aug 30 SARS: Income tax