Theory question 106
Business CalculationsCommerce 2 (essay)
(a) Amatco Ltd has an authorized capital of 6,000,000 ordinary shares of D5.00 per share. It issued 3,000,000 ordinary shares and all such shares were bought and paid for at D2.00 a share except 1,000 shares taken by Mr. Jones.
Calculate the value of the:
(i) authorized capital;
(ii) issued capital;
(iii) called-up capital;
(iv) paid-up capital.
(b) The following are the assets and liabilities of Morgan's Ltd:
Cash – ₦8,000
Building – ₦81,000
Creditors – ₦6,500
Sales returns – ₦12,000
Debtors – ₦18,000
Capital – ₦122,500
Overdraft – ₦11,000
Motor vehicle – ₦20,000
Sales – ₦50,000
Net profit – ₦20,000
Calculate the value of:
(i) working capital;
(ii) net sales;
(iii) net profit percentage;
(iv) fixed assets
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(a)(i) Authorised capital = 6,000,000 × D5 = D30,000,000.
(ii) Issued capital = 3,000,000 × D5 = D15,000,000 (nominal value of shares issued).
(iii) Called-up capital = 3,000,000 × D2 = D6,000,000.
(iv) Paid-up capital = 2,999,000 × D2 = D5,998,000 (Mr. Jones's 1,000 shares unpaid).
(b)(i) Current assets = cash 8,000 + debtors 18,000 = ₦26,000; current liabilities = creditors 6,500 + overdraft 11,000 = ₦17,500; working capital = ₦8,500.
(ii) Net sales = 50,000 − 12,000 = ₦38,000.
(iii) Net profit percentage = 20,000 ÷ 38,000 × 100 ≈ 52.6%.
(iv) Fixed assets = building 81,000 + motor vehicle 20,000 = ₦101,000.
Called-up capital uses the amount called per share (D2), not the nominal value.