It is easy to get confused by these sorts of calculations.
Fortunately Felipe from Quarry Bay School and Toby, Liam, Abi and
Livvy from Shute Community Primary School didn't get confused, and
all came up with the correct solutions.
The first rug measures $2$ yards $1$ foot by $1$ yards $1$ foot.
$2$ yards $1$ foot = $(2\times 3) + 1 = 7$ feet and $1$ yard $1$
foot = $(1\times 3) + 1 = 4$ feet. Therefore the area of the rug is
$7\times 4 = 28$ square feet.
Many of you correctly realised that if $1$ yard is $3$ feet then
$1$ square yard is $3\times 3 = 9$ square feet. $28 = 3\times 9 + 1
= 3$ square yards $1$ square foot. So Grandad was correct.