Theory question 106
Company Accounts6. Badgie Ltd has an authorised capital of D100,000 divided into 20,000 ordinary shares of D5 each. The whole of the shares were issued at par, payments being made as follows: On application D0.50; On allotment D1.50; First call D2.00; Second call D1.00.
Applications were received for 32,600 shares. It was decided to refund application monies on 2,600 shares and to allot the shares on the basis of two for every three applied for. The excess application monies are to be held to reduce amount payable on allotment. The calls were made and paid in full with the exception of one member holding 100 shares who paid neither the first nor the second call. All cash receipts and payments were passed through the bank.
You are required to prepare: (a) application account; (b) allotment account; (c) ordinary share capital account; (d) 1st call account; (e) 2nd call account; (f) bank account.
Show the model answer
Workings: application money 32,600 × 0.50 = 16,300; refund 2,600 × 0.50 = 1,300; money on 30,000 shares = 15,000, of which 10,000 is needed (20,000 × 0.50) and 5,000 is set off against allotment. Allotment due 20,000 × 1.50 = 30,000, cash 25,000.
(a) Application: Dr bank (refund) 1,300; share capital 10,000; allotment 5,000 = 16,300. Cr bank 16,300.
(b) Allotment: Dr share capital 30,000. Cr application 5,000; bank 25,000.
(c) Ordinary share capital: Cr application 10,000; allotment 30,000; first call 40,000; second call 20,000; balance 100,000.
(d) First call: Dr share capital 40,000. Cr bank 39,800; calls in arrears 200.
(e) Second call: Dr share capital 20,000. Cr bank 19,900; calls in arrears 100.
(f) Bank: Dr application 16,300; allotment 25,000; first call 39,800; second call 19,900 = 101,000. Cr refund 1,300; balance c/d 99,700.
Unpaid calls on 100 shares: 100 × 2.00 and 100 × 1.00 go to calls in arrears.