LECTURE NOTE AND ASSIGNMENT ON ACC 121-PRINCIPLES OF ACCOUNTING 2 FOR BOTH FULL TIME AND PART TIME

                                        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

INSTRUCTION: TO BE SUBMITTED TO CLASS PRESIDENT ON OR BEFORE MONDAY 22ND 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