Theory question 104
Company AccountsABC (Nig.) Ltd issued 200,000 ordinary shares of ₦1.00 each at ₦1.20 per share payable as follows: (a) 25k per share on application (b) 40k per share on allotment (including the premium). (c) 35k per share on first call (d) 20k per share on second and final call. Required: Show the ledger accounts to record the above information.
Show the model answer
Workings: application 200,000 × 25k = 50,000; allotment × 40k = 80,000 (share capital 40,000 + share premium 40,000 at 20k); first call × 35k = 70,000; final call × 20k = 40,000
Cash (Bank) Account: Dr application 50,000; allotment 80,000; first call 70,000; second and final call 40,000; total ₦240,000 (balance c/d)
Application Account: Dr ordinary share capital 50,000 / Cr bank 50,000
Allotment Account: Dr share capital 40,000, share premium 40,000 / Cr bank 80,000
First Call Account: Dr share capital 70,000 / Cr bank 70,000
Second and Final Call Account: Dr share capital 40,000 / Cr bank 40,000
Ordinary Share Capital Account: Cr application 50,000, allotment 40,000, first call 70,000, final call 40,000; balance ₦200,000
Share Premium Account: Cr allotment ₦40,000
The premium (20k × 200,000 = ₦40,000) is collected with allotment and goes to share premium, not share capital.