Theory question 109
Company AccountsThe authorized capital of Babs Company Limited is 200,000 ordinary shares. The company decided to issue 180,000 of the Share at $2 on the following terms. $0.40 on application. $0.70 on allotment. $0.90 on first and final call. Applications were received for 200,000 shares on June 20, 2019 and allotments made on June 30, 2019 on which date, excess application monies were returned to unsuccessful applicants. First and Final call was made on July 26, 2019. All installments were received on due dates.
You are required to prepare: (a) Bank Account (b) Ordinary Share Application Account (c) Allotment Account (d) First and Final Call Account (e) Ordinary Share Capital Account
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Application money 200,000 × 0.40 = 80,000; refund 20,000 × 0.40 = 8,000; kept 72,000. Allotment 180,000 × 0.70 = 126,000. Call 180,000 × 0.90 = 162,000.
(a) Bank Account ($): Dr June 20 Application 80,000; June 30 Allotment 126,000; July 26 First and final call 162,000 = 368,000 | Cr June 30 Application (refund) 8,000; Balance c/d 360,000.
(b) Ordinary Share Application Account: Dr Bank (refund) 8,000; Ordinary share capital 72,000 = 80,000 | Cr Bank 80,000.
(c) Allotment Account: Dr Ordinary share capital 126,000 | Cr Bank 126,000.
(d) First and Final Call Account: Dr Ordinary share capital 162,000 | Cr Bank 162,000.
(e) Ordinary Share Capital Account: Cr Application 72,000; Allotment 126,000; First and final call 162,000 = 360,000 | Dr Balance c/d 360,000 (180,000 shares × $2).
Refund the 20,000 shares' application money; share capital ends at 180,000 × $2.