This document serves as a guide to help reflect on my review of Assessment 1 for FAC2601. This is purely for reflection purposes and shows my decisions on the answers to the assessment as well as the marks I obtained for each answer.
Assessment 01 – Question 1a: Calculate the rand value of the capitalisation share issue to
the shareholders and provide the journal entry to record this transaction. Please motivate
your answer:
Capitalisation issue of 1 ordinary share for every 4 shares held at R2.00 per share.
• Right under the balances given is a comment stating that the transactions below are
included in the capital structure above (included in the balances). However, I
specifically excluded the calculation of the capitalisation issue as I cannot calculate
how many shares or what the value of shares were before the capitalisation issue.
• As per the balances taken from the books of ZTL Ltd, 550 000 shares are held by
shareholders (R550 000.00 divided by R1 as it is R1 shares)
• 550 000 divided by 4 = 137 500 shares that will be issued.
• R2 per share multiplied by 137 500 shares = R275 000.00 (Rand value of
capitalisation share issue)
Journal entry to record this transaction:
• Debit the Retained earnings account with the amount of the capitalisation shares
(R275 000.00)
• Credit the share capital account. (R275 000.00)
Journal Entry Dr Cr
R R
Retained Earnings 275 000
Issued ordinary share capital 275 000
Capitalisation issue of one share for every
four shares held
Motivated Answer:
Retained earnings is an Equity account and so is issued ordinary share capital. This means
that because of the basic accounting equation, since both are equity accounts, one has to
decrease and one has to increase for the accounting equation to be true. All calculations can
be seen above.
Assessment 01 – Question 1b: Calculate the dividend amount payable for the year ended
31 December 2023.
Ordinary Shares Dividends:
• (550 000 + 137 500) shares x 10c dividends each = R68 750
Non-Cumulative Preference Shares Dividends:
• 35 000 shares are assumedly held for the entire year.
• R220 000 divided by 35 000 = R6.29 (Price per non-cumulative preference share)
• 35 000 shares x R6.29 x 10% = R22 000
Cumulative Preference Shares Dividends:
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