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2. Imagine Mkude is a part of a start-up team preparing to pitch his business idea to
potential investors. His company, Lauwo Ltd, has developed a ground breaking
virtual reality gaming platform. Mkude’s funding strategy for Lauwo Ltd. involves
a combination of approaches aimed at securing the necessary capital to support
the growth and development of their virtual reality gaming platform.
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Required: Explain what equity-based financial securities are and how they relate to
Lauwo Ltd., funding strategy?
3. Wazazi Ltd bought 4,000 bonds each with a face value of TZS 2,000 at par on 1st
January 2019. The coupon rate is 12 per cent bonds with interest payable semi-
annually, on 30 June and 31 December.
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st
Required: Record the transaction in the investment account of the company for the
year 2019.

Kasuku Ltd bought 10,000, 10 per cent treasury bonds with a par-value of TZS
5,000 each on 1 January 2021 at TZS 45,000,000 through BoT auction. On 1
st
st
September 2021, the company decided to sell half of the bonds each at TZS 4,800
cum interest. Interest is paid semi-annually, on 30th June and 31 December of
st
every year. The market price of a similar bond at the time of sale was TZS 4,600.
Required:

(a) Explain whether the bond was purchased at par or discount.

(b) Record the investment transactions in the books of accounts of Kasuku Ltd.

Wazawa Ltd bought TZS 30,000,000, 10 per cent corporate bonds of Matata Plc
at 90 cum- interest on 1 March 2022. Interest is payable semi-annually, on 30th
st
June and 31 December. On 1 November, Wazawa Ltd decided to diversify by
st
st
buying 10,000 common stocks of XZ Bank Plc at an ex-div price of TZS 1,800
each. The face value of the common shares is TZS 1,500 each. Based on the
performance of the company for the first three quarters of the financial year, The
XZ Bank Plc expects to distribute TZS 100 per share as a dividend at the end of
the year (December), payable one month after the end of the financial year.
Required:

(a) Prepare investment accounts of Wazawa Ltd, and then determine investment
income from operating activities.
(b) Determine the amount of accrued income for reporting in the statement of financial
position.

Student’s Book Form Five
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