FAC1601 ASSESSMENT 3 FIRST ATTEMPT
QUESTION ONE
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. With a financial year-end on 30 June, 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:
1. Round off all your answers to the nearest rand (eg: 50.56 = 51)
2. Don’t use any special characters (&) and don’t use bold in your answer. It will be marked
incorrect.
3. Do not use any abbreviations.
4. Please remember the brackets around the amounts must be indicated by a negative amount
[eg: (50) will be -50].
ANSWER
220000
QUESTION 2
Description Amount (R)
Revenue 3,205,100
Cost of sales -319400
Inventory (opening balance) 46200
Purchases 305000
Carriage on purchases 22,600
Inventory (closing) -54400
Gross profit 2885700
Other income 210000
Fair value adjustment: Listed share
131025
investment
Dividend income: Listed share investment 78975
Distribution, administrative and other
-844,700
expenses
Salaries and wages 379200
Directors’ remuneration 200100
Auditor’s remuneration 141800
Credit losses 13400
Depreciation 59000
QUESTION ONE
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. With a financial year-end on 30 June, 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:
1. Round off all your answers to the nearest rand (eg: 50.56 = 51)
2. Don’t use any special characters (&) and don’t use bold in your answer. It will be marked
incorrect.
3. Do not use any abbreviations.
4. Please remember the brackets around the amounts must be indicated by a negative amount
[eg: (50) will be -50].
ANSWER
220000
QUESTION 2
Description Amount (R)
Revenue 3,205,100
Cost of sales -319400
Inventory (opening balance) 46200
Purchases 305000
Carriage on purchases 22,600
Inventory (closing) -54400
Gross profit 2885700
Other income 210000
Fair value adjustment: Listed share
131025
investment
Dividend income: Listed share investment 78975
Distribution, administrative and other
-844,700
expenses
Salaries and wages 379200
Directors’ remuneration 200100
Auditor’s remuneration 141800
Credit losses 13400
Depreciation 59000
