I WISH YOU ALL A RESOUNDING SUCCESS IN THIS FORTHCOMING EXAMINATION.
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PATRIOT ODUNARO B. J (08038454008)
LECTURE NOTE:
i. Ordinary Shares entitle their
holders to divisible profit of the company remaining after prior interests have
been satisfied.
ii. Preference Shares entitle to dividends at a
predetermined rate before any other class of shareholders are paid.
iii. Authorised Share Capital is the registered
capital of the company as contained in the
Memorandum of Association.
iv. Issued
Share Capital is the portion of the authorised capital which is issued to the public for
subscription.
v. Called Share Capital is the
portion of the issued capital that has been called.
vi. Paid Up Capital is
the portion of the called capital to which favourable responses have been
received. It represents the actual amount paid by the shareholders in respect
of the calls made on them.
Take note of the following terms:
a. Par
is where the normal value is equal to issued price of ordinary shares.
For instead if normal value is N1 and issued price is N1, this implies
the shares were issued at par.
b. Discount is where the normal value is greater than the issued price of ordinary shares. For
instead if normal value is N1 and issued price is N0.90, this implies
the shares were issued at discount of N0.10 (N1-N0.90).
c. Premium is where the normal value is less than the issued price of ordinary shares.For
instead if normal value is N1 and issued price is N1.50, this implies
the shares were issued at premium of N0.50 (N1.50-N1.00).
ILLUSTRATION 1:
Brits Nigeria Limited issued 200,000
ordinary shares
of N1.00 each atN1.20 per share
payable as follows:
i.
25k
per share on application.
ii.
40k
per share on allotment (including the premium)
iii.
35k
per share on first call
iv.
20k
per share on second and final call
Required: Show the ledger accounts
to record the above transactions
SUGGESTED SOLUTION:
BRITS NIGERIA LIMITED
|
|||||||||
ORDINARY SHARE APPLICATION ACCOUNT
|
|||||||||
N
|
N
|
||||||||
Ordinary Share Capital
|
50,000
|
Cash
|
50,000
|
||||||
(200,000 X 0.25)
|
|||||||||
50,000
|
50,000
|
||||||||
ORDINARY SHARE ALLOTMENT ACCOUNT
|
|||||||||
N
|
N
|
||||||||
Ordinary Share Capital
|
40,000
|
Cash
|
80,000
|
||||||
[200,000 X (0.40-0.20)]
|
|||||||||
Share Premium
|
40,000
|
||||||||
[200,000 X (1.20-1.00)]
|
|||||||||
80,000
|
80,000
|
||||||||
ORDINARY SHARE FIRST CALL ACCOUNT
|
|||||||||
N
|
N
|
||||||||
Ordinary Share Capital
|
70,000
|
Cash
|
70,000
|
||||||
[200,000 X 0.35]
|
|||||||||
70,000
|
70,000
|
||||||||
ORDINARY SHARE SECOND AND FINAL CALL
ACCOUNT
|
|||||||||
N
|
N
|
||||||||
Ordinary Share Capital
|
40,000
|
Cash
|
40,000
|
||||||
[200,000 X 0.20]
|
|||||||||
40,000
|
40,000
|
||||||||
ORDINARY SHARE CAPITAL ACCOUNT
|
|||||||||
N
|
N
|
||||||||
Balance c/d
|
200,000
|
Ordinary Share Application
|
50,000
|
||||||
Ordinary Share Allotment
|
40,000
|
||||||||
Ordinary Share First Call
|
70,000
|
||||||||
Ordinary Share Second and Final Call
|
40,000
|
||||||||
200,000
|
200,000
|
||||||||
Balance b/d
|
200,000
|
||||||||
SHARE PREMIUM ACCOUNT
|
|||
N
|
N
|
||
Balance c/d
|
40,000
|
Ordinary Share Allotment
|
40,000
|
40,000
|
40,000
|
||
Balance b/d
|
40,000
|
||
CASH ACCOUNT
|
|||
N
|
N
|
||
Ordinary Share Application
|
50,000
|
Balance c/d
|
240,000
|
Ordinary Share Allotment
|
80,000
|
||
Ordinary Share First Call
|
70,000
|
||
Ordinary Share Second and Final Call
|
40,000
|
||
240,000
|
240,000
|
||
Balance b/d
|
240,000
|
STATEMENT OF FINANCIAL POSITION
|
|||
N
|
N
|
||
Share Capital:
|
Current Assets:
|
||
200,000 Ordinary Share
|
Cash
|
240,000
|
|
of N1.00 each
|
200,000
|
||
Share Premium
|
40,000
|
||
240,000
|
240,000
|
||
REVISION QUESTIONS ON ACC
121-PRINCIPLES OF ACCOUNTING 2 FOR FULL TIME AND PART TIME
1. Define control Account and list
five reasons for control accounts.
2. Mention five each items to be
found in sales ledger control account and purchases ledger control account.
3. Define partnership and state
the contents of partnership deed.
4. In the absence of an agreement
by the partners, Section 24 of the Partnership Act 1890 shall apply. State the
provisions.
5. Differentiate between the following terms:
i.
Ordinary Shares and Preference Shares.
ii. Authorised
Share Capital and Issued Share Capital
iii. Called
Share Capital and Paid Up Capital
6. List six types of non-profit
oriented organisation and list three
accounting records and financial statements of social clubs.
7.
Differentiate between non-profit oriented organisation and profit
oriented organisation.
8. Brits Nigeria Limited issued 200,000 ordinary
shares of N1.00 each atN1.20 per share
payable as
follows:
i.
25k
per share on application.
ii.
40k
per share on allotment (including the premium)
iii.
35k
per share on first call
iv.
20k
per share on second and final call
Required: Show the ledger accounts to
record the above transactions
9. Write short note on the following:
i. Prime Cost ii. Direct Labour Cost iii.
Cost of Raw Material Consumed
iv. Production Overhead Expenses v. Work-In-Progress
10. Peter and Paul formed a partnership on 1st
January, 2018. The partnership agreement contains the following:
i. The partners fixed capital are Peter N24,000 and
Paul N30,000.
ii. Paul to receive a salary of N1,800 per year.
iii. Interest on capital to be calculated at 5% per
annum.
iv. Interest is to be charged on drawing at the rate
of 2%.
v. Peter and
Paul to share profit in ratio 3:2 respectively.
During the year to 31st December 2018, drawings were
Peter N2,250 , Paul N1,750 and the net profit was N13,500. The partners decided
to maintain fixed capital account.
You are required to show:
(a)
The
Profit and Loss Appropriation Account for the year ended 31st December 2018.
(b)
The
partners Current Account
(c)
Statement
of Financial Position ( Extract ) as at 31st December 2018
11. The following balances were extracted from the
books of Aiyegbaogbon Enterprises on
31st
December, 2018.
N
Sales ledger, debit balance 1/1/2018 98,260
Sales ledger, credit balance 1/1/2018 2,370
Bought ledger, credit balance 1/1/2018 72,190
Bought ledger, debit balance 1/1/2018 4,210
Cash purchases 27,380
Cash sales 19,360
Accounts settled by contra 6,220
Bills dishonoured 7,500
Bills debts written off 5,260
Bills of exchange drawn on customers 34,730
Returns Inward 7,450
Returns Outwards 8,920
Cash received from debtors
689,230
Cash paid to suppliers 495,140
Discount Received 19,320
Discount Allowed
24,750
Cash refunded to customers 1,270
Sales ledger, debit balance 31/12/2018 120,570
Sales ledger, credit balance 31/12/2018
2,010
Bought ledger, debit balance 31/12/2018 3,340
Bought ledger, credit balance 31/12/2018 55,340
Show all necessary workings.
You are required to prepare:
(a)
Credit
Sales
(b)
Credit
Purchases
(c)
Total
Sales
(d)
Total
Purchases
12. On January 1, 2019 the sales ledger balance of
Foyegbe was N12,000 debit while the
bought ledger balance was N4,850 credit.
The
following transactions took place in the month of January 2019.
N
Credit sales 175,900
Bad
debt 4,225
Dishonoured
cheque 6,250
Credit
purchases 90,300
Returns
inwards 7,850
Bills receivable 22,500
Cash received from debtors 78,000
Cash
paid to creditors 57,000
Discount
allowed 2,250
Discount
received 4,725
Cheques from debtors 37,500
Bills
payable 10,750
Debit balance in bought ledger
transferred
to sales ledger 1,300
Discounts allowed but
subsequently disallowed 750
Discounts received but
subsequently withdrawn 725
Required: Prepare:
(i)
Total
Debtors Account
(ii)
Total
Creditors Account
13. Mawibekiri who has not kept a
complete set of books for his business has been able to provide the following
information.
31st
December, 2017 31st December,
2018
N N
Plant and Machinery 31,500 35,350
Stock in trade 15,120 17,255
Trade Debtors 11,396 13,020
Trade Creditors 6,020 6,468
Prepayment-Rates - 350
Accruals:
Rent 910 1,750
Expenses 840 1,050
Additional information:
i. A summary of his cash transactions for the
year is shown below:
|
|
Cash Book
|
|
|
|
N
|
|
N
|
|
|
Balance b/f
|
1,834
|
Creditors
|
119,112
|
|
Cash Sales
|
116,592
|
Wages
|
18,669
|
|
Debtors
|
57,134
|
Rent
|
5,250
|
|
Rates
|
1,750
|
||
|
Expenses
|
11,382
|
||
|
New Machinery
|
7,000
|
||
|
Drawings
|
7,560
|
||
|
Balance c/d
|
4,837
|
||
|
175,560
|
|
175,560
|
|
|
Balance b/d
|
4,837
|
|
|
ii. Details of discounts are as follows:
Allowed
N2,205 and Received N4,578
You are required to prepare:
(a)
Opening
Statement of Affairs.
(b)
Trading,
Profit or Loss Account for the year ended 31st December, 2018.
(c)
A
Statement of Financial Position as at that date.
14. On 1st April 2018, Banuso purchased a business
for N5,770 and paid for it the same day.
The assets and liabilities of the business on that day were as follows with the
one on 31st March 2019.
1st
April, 2018 31st
March, 2019
N N
Freehold Premises 3,000 3,000
Equipment 300 450
Shop Fittings 900 1,100
Stock-In-Trade 1,400 1,600
Debtors 320 640
Creditors 150
90
Cash at Bank - 390
On 1st April, 2018, Banuso opened a business account
into which he paid N350. During the year his drawings were:
Cash N1,100
Goods N140
He also brought in additional cash capital of N700.
You are required to prepare a statement showing the
profit or loss of the business for the year ended 31st March 2019 after taking
into consideration the following:
(i)
Depreciation
of: Shop Fittings N100 and
Equipment N30
(ii)
N80
was written off as bad debts.
15. The following list of balances was extracted
from the records of Motiriri Textile Mills on 31st December, 2017.
N
Stock of raw cotton: 1st January 2017 22,100
Stock of raw cotton: 31st December 2017 23,400
Purchase of raw cotton 234,500
Carriage on raw cotton brought 67,900
Direct wages 111,300
Factory Expenses:
Depreciation on plant and machinery 45,300
Salaries 71,200
Power and heat 66,100
Insurance and maintenance 17,500
Required:
Prepare manufacturing account for the year ended 31st
December, 2017.
16. Assignment Won Wa Die is a manufacturer. The trial balance as at
31st December, 2018 is as follows:
DR CR
N N
Delivery van expenses 2,500
Lighting/ heating-Factory 2,859
Lighting/ heating-Office 1,110
Manufacturing wages 45,470
General Expenses 9,450
Sales men`s commission 7,860
Purchases of raw material 39,054
Rent 7,000
Machinery ( Cost N50,000) 32,500
Office Equipment (Cost N15,000) 11,000
Office Salary 6,285
Debtors 28,370
Creditors 19,450
Bank 13,337
Sales 136,500
Premises (Cost N50,000) 40,000
Stock at 31st December, 2017:
Raw Material 8,565
Finished goods 29,480
Work in progress 5,000
Drawings 8,560
Capital 142,450
______ _______
298,400 298,400
Additional information:
i. Stock at 31st December, 2018 are valued at :
Raw Material N 9,050
Finished goods N31,200
Work in progress N 3,000
ii. Depreciation:
Machinery 20%, Office Equipment
15%, Premises 10% and all are on
reducing balance method.
iii. Manufacturing wages due but
paid at 31st December, 2018 amounted N305 and rent
prepaid N100.
iv. General expenses and rent are to be allocated
as follows:
General expenses 1/6 to factory and
remaining are to be charged to office.
Rent 3/5 to factory and remaining are to
be charged to office.
v. Finished goods has to have 15% mark-up
You are required to:
(a)
Prepare
for Assignment Won Wa Die Limited Account for the year ended 31st
December, 2018
(b)
Statement
of Financial Position as at that date.
INSTRUCTION: TO BE SUBMITTED TO CLASS PRESIDENT ON OR BEFORE SUNDAY 28TH JULY, 2019 BEFORE 12NOON PROMPT.
ASSIGNMENT
Foyegbe Nigeria Limited issued 500,000 ordinary shares
of N1.00 each atN1.50 per share payable as follows:
i.
25k
per share on application.
ii. 70k
per share on allotment (including the premium)
iii.
35k
per share on first call
iv.
20k
per share on second and final call
Required: Show the ledger accounts
to record the above transactions.................................................................................................................................................................................................................................................................................................................................................
CORRECTION:
ORDINARY SHARE APPLICATION ACCOUNT
|
|||||||||
N
|
N
|
||||||||
Ordinary Share Capital
|
125,000
|
Cash
|
125,000
|
||||||
(500,000 X 0.25)
|
|||||||||
125,000
|
125,000
|
||||||||
ORDINARY SHARE ALLOTMENT ACCOUNT
|
|||||||||
N
|
N
|
||||||||
Ordinary Share Capital
|
100,000
|
Cash
|
350,000
|
||||||
[500,000 X (0.70-0.50)]
|
|||||||||
Share Premium
|
250,000
|
||||||||
[500,000 X (1.50-1.00)]
|
|||||||||
350,000
|
350,000
|
||||||||
ORDINARY SHARE FIRST CALL ACCOUNT
|
|||||||||
N
|
N
|
||||||||
Ordinary Share Capital
|
175,000
|
Cash
|
175,000
|
||||||
[500,000 X 0.35]
|
|||||||||
175,000
|
175,000
|
||||||||
ORDINARY SHARE SECOND AND FINAL CALL
ACCOUNT
|
|||||||||
N
|
N
|
||||||||
Ordinary Share Capital
|
100,000
|
Cash
|
100,000
|
||||||
[500,000 X 0.20]
|
|||||||||
100,000
|
100,000
|
||||||||
ORDINARY SHARE CAPITAL ACCOUNT
|
|||||||||
N
|
N
|
||||||||
Balance c/d
|
500,000
|
Ordinary Share Application
|
125,000
|
||||||
Ordinary Share Allotment
|
100,000
|
||||||||
Ordinary Share First Call
|
175,000
|
||||||||
Ordinary Share Second and Final Call
|
100,000
|
||||||||
500,000
|
500,000
|
||||||||
Balance b/d
|
500,000
|
||||||||
SHARE PREMIUM ACCOUNT
|
|||
N
|
N
|
||
Balance c/d
|
250,000
|
Ordinary Share Allotment
|
250,000
|
250,000
|
250,000
|
||
Balance b/d
|
250,000
|
||
BANK ACCOUNT
|
|||
N
|
N
|
||
Ordinary Share Application
|
125,000
|
Balance c/d
|
750,000
|
Ordinary Share Allotment
|
350,000
|
||
Ordinary Share First Call
|
175,000
|
||
Ordinary Share Second and Final Call
|
100,000
|
||
750,000
|
750,000
|
||
Balance b/d
|
750,000
|
STATEMENT OF FINANCIAL POSITION
|
|||
N
|
N
|
||
Share Capital:
|
Current Assets:
|
||
200,000 Ordinary Share
|
Bank
|
750,000
|
|
of N1.00 each
|
500,000
|
||
Share Premium
|
250,000
|
||
750,000
|
750,000
| ||
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