Theory question 102
Company AccountsSection B
Archibong Stores Limited registered with an Authorised Share Capital of ₦500,000, consisting of 500,000 ordinary shares of ₦1 each. The shares were issued and payable on the following terms: (a) ₦0.50 on application (b) ₦0.30 on allotment (c) ₦0.10 on first call and (d) ₦0.10 on final call. All the shares were fully subscribed and paid for. You are required to prepare: (i) Cash Book (ii) Application and Allotment Account (iii) Share Capital Account (iv) First Call Account and (v) Final Call Account.
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Workings: application 500,000 × ₦0.50 = 250,000; allotment × ₦0.30 = 150,000; first call × ₦0.10 = 50,000; final call × ₦0.10 = 50,000
(i) Cash Book (Dr): application and allotment 400,000; first call 50,000; final call 50,000; total 500,000 = balance c/d (Cr) ₦500,000
(ii) Application and Allotment Account: Dr share capital 400,000 / Cr cash 400,000 (application 250,000 + allotment 150,000)
(iii) Ordinary Share Capital Account: Cr application and allotment 400,000; first call 50,000; final call 50,000; balance c/d (Dr) ₦500,000
(iv) First Call Account: Dr share capital 50,000 / Cr cash 50,000
(v) Final Call Account: Dr share capital 50,000 / Cr cash 50,000
Each instalment account is debited when the money becomes due (credit share capital) and credited when cash comes in.