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JAMB Principles of Accounts 2010 Question 44

Question 44

Company Accounts

Given:
6 000 000 10% preference shares of ₦0.50 each
6 000 000 ordinary shares of ₦1 each
Capital reserves ₦2 700 000
Long-term liabilities ₦4 000 000
Find the value of authorized share capital.

  1. A.13 000 000
  2. B.12 000 000
  3. C.9 000 000
  4. D.15 700 000
Show the answer and explanation

Answer: C (9 000 000)

Explanation

6 000 000 × 0.50 + 6 000 000 × 1 = ₦9 000 000; reserves and liabilities are not share capital.