Theory question 107
Company Accounts7. DATA LIMITED is issuing 10,000 ordinary shares of N1 each payable N0.10 on application, N0.20 on allotment, N0.40 on the First Call and N0.30 on the Second Call. Applications were received for 15,500 shares. A refund of the money is made in respect of 500 shares while for the remaining 15,000 shares applied for an allotment is to be made on the basis of 2 shares for every 3 applied for. The excess application monies are set off against the allotment monies.
You are required to prepare: (a) Bank Account (b) Application and Allotment Account (c) First Call Account (d) Second Call Account (e) Ordinary Share Capital Account (f) Balance Sheet extract.
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Workings: application money 15,500 × 0.10 = 1,550; refund 500 × 0.10 = 50; money on 15,000 shares 1,500, of which 1,000 is needed for 10,000 shares, so 500 is set off; allotment due 10,000 × 0.20 = 2,000, cash received 1,500.
(a) Bank: Dr application 1,550; allotment 1,500; first call 4,000; second call 3,000 = 10,050. Cr refund 50; balance c/d 10,000.
(b) Application and allotment: Dr bank (refund) 50; share capital 1,000 + 2,000 = 3,000; total 3,050. Cr bank 1,550 + 1,500 = 3,050.
(c) First call: Dr share capital 4,000; Cr bank 4,000.
(d) Second call: Dr share capital 3,000; Cr bank 3,000.
(e) Ordinary share capital: Cr application and allotment 3,000; first call 4,000; second call 3,000; balance 10,000.
(f) Balance sheet extract: issued and fully paid 10,000 ordinary shares of N1 each 10,000; bank 10,000.
Excess application money kept by the company reduces the cash due on allotment.