- Alice, Bibianne and Christine have been in partnership for several years sharing profits and losses in the ratio of 2:2:1 respectively after charging interest on...(Solved)
Alice, Bibianne and Christine have been in partnership for several years sharing profits and losses in the ratio of 2:2:1 respectively after charging interest on capital at the rate of 10%
On 1st April 2010, Christine retired from the partnership. Alice and Bibianne agreed to continue with the partnership and to share profits and losses equally after charging interest on capital at the rate of 10% per annum.
For the purpose of retirement of Christine from the partnership, Land and Buildings were revalued at sh. 2,000,000 and furniture and fittings at sh. 3,000,000. Goodwill of the partnership was valued at sh. 1,200,000 on 1st April 2010
The partners agreed that goodwill was to be written off immediately.
The relevant adjustments relating to the above transactions had not been made when the following trial balance as at 30 September 2010 was extracted from the books of the partnership.
Sh. "000" Sh. "000"
Capital
Alice 800
Bibianne 700
Christine 600
Current Accounts
Alice 200
Bibianne 200
Christine 100
Drawings
Alice 180
Bibianne 140
Christine 180
Inventory (30 September 2010) 500
Land and Buildings 1,500
Furniture and fittings 400
Motor vehicles 800
Accounts receivables 470
Accounts payables 200
Prepaid insurance 50
Accrued electricity 20
Bank balance 1,000
Net profit for the year 2,400
5,220 5,220
Additional information
1. Assume the net profit accrued evenly throughout the year
2. Christine agreed to take on her retirement one of the motor vehicles at book value of sh. 400,000 and the balance due to her to be paid in cash
Required:
(a) Income statement for the year ended 30 September 2010
(b) Partner’s current accounts
(c) Partner’s capital accounts
(d) Statement of financial position as at 30th September 2010
Date posted: October 3, 2022. Answers (1)
- The following information was obtained from the books of Nairobi water fund for the financial year ended
30th June 2011
1. Payment of sh. 3,000,000 was made...(Solved)
The following information was obtained from the books of Nairobi water fund for the financial year ended
30th June 2011
1. Payment of sh. 3,000,000 was made to the members
2. Administrative salaries amounted to sh. 400,000 while other administrative expenses amounted to sh.
500,000
3. Total contributions received from members were sh. 4,800,000
4. The total investments in the fund amounted to sh. 12,000,000 which earned interest of sh. 2,400,000
5. On 30th June 2010, the fund account had a credit balance of sh. 10,800,000 while the paymaster general account had a debit balance of sh. 2,00,000
Required:
(i) Income statement for the year ended 30th June 2011
(ii) Statement of financial position as at 3oth June 2011
Date posted: October 3, 2022. Answers (1)
- In the context of not-for-profit organizations, explain the following terms
(i) Honorarium
(ii) Subscription
(iii) Legacy(Solved)
In the context of not-for-profit organizations, explain the following terms
(i) Honorarium
(ii) Subscription
(iii) Legacy
Date posted: October 3, 2022. Answers (1)
- Highlight six types of report that could be generated by an accounting package (Solved)
Highlight six types of report that could be generated by an accounting package
Date posted: October 3, 2022. Answers (1)
- Mashariki Enterprises provided the following details of assets and liabilities as at 1st June 2010. The cost details were obtained from the invoice files while...(Solved)
Mashariki Enterprises provided the following details of assets and liabilities as at 1st June 2010. The cost details were obtained from the invoice files while others were obtained verbally from the managing director who was the proprietor
Asset Cost/Valuation Date of acquisition Depreciation
Sh. "000"
Equipment and furniture 2,300 1-Sep-2008 10 % per annum
Buildings 26,000 1-Jan-2005 5 % per annum
Land 3,400 1-Jan-2005 nil
Motor Vehicles 1,600 1-May-2010 20 % per annum
Bank balances 1,000
Trade receivables 1,380
Opening inventory 1,800
Prepaid insurance 450
Cash 120
Trade payables 1,100
Bank Loan 2,400
Accrued sundry expenses 2,600
The policy of the firm is to provide full depreciation in the year of purchase and non in the year of disposal, using the straight-line method
The following is a summary of receipts and payment for the year ended 31st May 2011
Bank Cash Bank Cash
Sh. "000" Sh. "000" Sh. "000" Sh. "000"
Sale of Equipment 200 Rent 2,000
Receipts from debtors 13,000 Donations 250
Sales 4,150 Supplier of goods 5,000
Furniture 900
Salaries and wages 1,400
Stationary 300
Motor vehicles 400
Bank loan 600
Drawings 200
Sales commission 150
Insurance 1,200
Bank charges 120
Sundry expenses 2,800
Interest on loan 240
Additional information
1. The following balances were available as at 31 May 2011
• Prepaid insurance sh. 250,000
• Accrued salaries Sh. 150,000
2. Equipment with a cost of Sh. 300,000 was disposed of during the year
3. Closing inventory was valued at sh. 1,200,000
4. Trade receivables as at 31st May 2011 were sh. 1,150,000 while trade payables were sh. 1,250,000
Required:
(a) Income statement for the year ended 31 May 2011
(b) Statement of financial position as at 31 May 2011
Date posted: October 3, 2022. Answers (1)
- (a) The following information relates to the property, plant and Equipment of Annex construction Limited as at
1
st October 2010:
Asset Cost Accumulated Depreciation Estimated useful life...(Solved)
(a) The following information relates to the property, plant and Equipment of Annex construction Limited as at
1
st October 2010:
Asset Cost Accumulated Depreciation Estimated useful life (years)
Sh. "000" Sh. "000" Sh. "000"
Freehold Land 60,000 - -
Buildings: Factory 150,000 30,000 50
:Office premises 180,000 30,000 45
Plant and Machinery 475,000 365,000 10
Computers 295,000 85,000 4
Motor Vehicles 50,000 35,000 4
Furniture and Fittings 100,000 40,000 5
Additional information
1. None of the assets was fully depreciated as at the end of the year
2. The following assets were acquired on 1st April 2011
Sh. “million”
Plant and Machinery 100
Computers 8
Motor Vehicles 28
3. On 1st April 2011, Motor vehicles with a cost of sh. 6,000,000 were disposed of for sh. 2 million. The cumulative depreciation on the Motor vehicles as at 1st October 2010 was sh. 5 million.
4. Freehold Land and Buildings were revalued on 2nd October 2010 as follows
Sh. “million”
Freehold Land 400
Buildings: Factory 240
: Office Premises 150
5. Depreciation is provided on a prorate basis from the date of acquisition using the straight-line method
6. Assume nil residue value for the assets
Required:
(a) The company’s property, Plant and Equipment movement schedule for the year ended 30th September 2011
(b) Define an intangible asset
(c) Outline four ethical issues that guide accountants while executing their duties
Date posted: October 3, 2022. Answers (1)
- Chungala limited is a public company incorporated to trade on recycled products. The accountant presented the finance manager the following financial statements for the years...(Solved)
Chungala limited is a public company incorporated to trade on recycled products. The accountant presented the finance manager the following financial statements for the years 2010 and 2011
Sh. "millions"
Sales 9,348
Cost of sales (5,688)
Gross profits 3,660
Distribution costs (1,128)
Administrative expenses (1,200)
Operating profit 1,332
Gain on disposal 20
interests paid (60)
Profit before tax 1,292
Income tax expense (304)
Profit after tax 988
Dividends (300)
Retained profits for the year 688
Retained profits brought forward 1616
Retained profits carried forward 2,304
Chungana Ltd
Statement of financial position as at 30 September
2011 2010
Sh. "million" Sh. "million"
Non-Current Assets
Plant and Equipment 6,400 5,200
Motor Vehicles 2,400 1,600
8,800 6,800
Current Assets
Inventory 300 240
Accounts receivables 124 100
Bank balances 216 140
640 480
Total assets 9,440 7,280
Equity and Liabilities
Ordinary Share Capital (sh. 10 each) 5,200 4,800
Share premium 880 320
Retained profits 2,304 1,616
8,384 6,736
Non-Current Liabilities
Long term loan 320 80
Current Liabilities
Accounts payables 96 56
Taxation 480 320
proposed dividends 160 88
736 464
Total capital and Liabilities 9,440 7,280
Additional Information
1. During the year, plant worth sh. 2,200,000 was acquired and Motor vehicles which had cost sh. 200,000,000 were disposed of.
2. The book values of the plant and Equipment and Motor Vehicles comprise
Plant and Equipment Motor Vehicles
2010 2012 2010 2012
Sh. Million Sh. Million Sh. Million Sh. Million
Cost 6,120 7,700 1,920 2,880
Accumulated depreciation (920) (1,300) (320) (480)
Net Book Value 5,200 6,400 1,600 2,400
3. Administration expenses comprise
Sh. Million
Depreciation Plant and equipment 840
Motor Vehicles 300
Others 60
1,200
4. Gain on disposal comprises
Sh. Million
Gain on disposal of Plant and equipment 40
Loss on disposal of Motor Vehicles (20)
20
Required:
Statement of cash flows for the year ended 30th September 2011 in conformity with the requirements of
International Accounting Standard (IAS 7), “Statement of Cash flows”
Date posted: October 3, 2022. Answers (1)
- The following trial balance was extracted from the books of Malezi Ltd as at 31st October 2011:
...(Solved)
The following trial balance was extracted from the books of Malezi Ltd as at 31st October 2011:
Sh. "000" Sh. "000"
Buildings (Cost) 10,000
Plant and Equipment (Cost) 1,400
Motor Vehicles (Cost) 320
Accumulated Depreciation (1 November 2010)
Buildings 4,000
Plant and Equipment 480
Motor vehicles 120
Cash at Bank 100
Inventory (1 November 2010) 2,200
Administrative expenses 2,206
Distribution costs 650
Suspense 1,500
Retained earnings 360
Trade receivables 876
Purchases 4,200
Dividends paid 200
Sales revenue 11,752
Value added Tax (VAT) Payable 1,390
Trade payables 1,050
Share premium 500
Ordinary Shares of sh. 100 each 1,000
22,152 22,152
Additional information
1. Inventory as at 31st October 2011 was valued at sh. 1,600,000
2. Depreciation is to be provided as follows
Assets Rate per annum
Buildings 5 % on straight line
Plant and Equipment 20 % on reducing balance
Motor vehicles 25 % on reducing balance
Depreciation is to be charged to administration expenses
3. The directors do not propose payment of dividends
4. An allowance for bad debts of sh. 76,000 is to be made relating to a customer who was declared bankrupt. A further allowance for doubtful debts of 5 % is to be made with respect to the trade receivables as at 31st October 2011
5. The suspense account of sh. 1,500,000 relates to 10,000 new ordinary shares which were issued at par value of sh. 150 each on 1st October 2011
Required:
(a) Statement of comprehensive income for year ended 31st October 2011
(b) Statement of financial position as at 31st October 2011
Date posted: October 3, 2022. Answers (1)
- The estimates and expenditure details relating to the ministry of Youth and social services for the year
2010/2012 were as follows
Code Details
...(Solved)
The estimates and expenditure details relating to the ministry of Youth and social services for the year
2010/2012 were as follows
Code Details
Original estimates Actual expenditure
Sh. "millions" Sh. "millions"
010 Personal emoluments 288 324
050 House allowances 54 46.8
080 Passage and leave 18 16.2
115 Travelling expenses 79.2 82.8
140 Electricity and water 21.6 23.4
221 Purchase of Equipment 180 144
640 Appropriation-in-Aid 54 43.2
Supplementary estimates authorized during the year were as follows
010 Personal emoluments Sh. 28.8 million (increased)
115 Travelling expenses Sh. 7.2 million (reduced)
Required:
Appropriation account for the year ended 30June 2011, showing the net surplus to be surrendered to the exchequer
Date posted: October 3, 2022. Answers (1)
- In the context of public sector accounting, explain the following terms:
(i) Vote book
(ii) Trust fund
(iii)Capital project fund(Solved)
In the context of public sector accounting, explain the following terms:
(i) Vote book
(ii) Trust fund
(iii)Capital project fund
Date posted: October 3, 2022. Answers (1)
- Outline five components of a computerized accounting system.(Solved)
Outline five components of a computerized accounting system.
Date posted: October 3, 2022. Answers (1)
- The financial statements of Wendani Limited for the year ended 31st January 2011 and 31st January 2012 are given below
Statement of financial position as at...(Solved)
The financial statements of Wendani Limited for the year ended 31st January 2011 and 31st January 2012 are given below
Statement of financial position as at 31st January
2011 2012
Sh. '000' Sh. '000'
Assets
Non-Current Assets (Net Book Value) 11,000 14,000
Current Assets
Inventory 2,000 3,000
Trade receivables 2,500 2,800
Bank balance - 500
4,500 6,300
Total Assets 15,500 20,300
Equity and Liabilities
Capital and Reserves
1,000,000 ordinary shares of sh. 10 each 10,000 10,000
Revenue Reserves 3,000 4,100
13,000 14,100
Non-Current Liabilities
8% debentures - 5,000
Current Liabilities
Trade payables 1,500 1,200
Bank Overdraft 1,000 -
2,500 1,200
Total Capital and Liabilities 15,500 15,300
Income Statement for the year ended
2011 2012
Sh. '000' Sh. '000'
Sales 20,000 28,000
Cost of sales (15,000) (21,000)
Gross profits 5,000 7,000
Administrative expenses (3,800) (4,600)
Finance costs - (400)
Net profit 1,200 2,000
Inventory as at 1st February 2010 was sh. 5,000,000
Required:
For each year, compute the following
(i) Gross profit margin
(ii) Inventory turnover
(iii) Return on Equity
(iv) Return on assets
(v) Acid test ratio
(vi) Current ratio
(vii) Financial leverage
(b) Comment on the liquidity of the company
Date posted: October 3, 2022. Answers (1)
- Explain three reasons why the amount of cash flows of a business entity might differ from the profits
generated by the business entity during the same...(Solved)
Explain three reasons why the amount of cash flows of a business entity might differ from the profits
generated by the business entity during the same period
Date posted: October 3, 2022. Answers (1)
- The following assets and liabilities were extracted from the books of Sparrows Sports Club as at 31st March:
...(Solved)
The following assets and liabilities were extracted from the books of Sparrows Sports Club as at 31st March:
2011 2012
Sh. '000' Sh. '000'
Equipment 18000 16000
Furniture and fittings 1200 1000
Subscription in arrears 130 100
Subscription in advance 600 500
Inventory of stationary 15 5
Bar inventory 3500 ?
Cash at Bank 1000 ?
Petty cash 25 15
Bar payables 700 1000
Accrued electricity 30 40
The summary of receipts and payments for year ended 31st March 2012 was as follows:
Receipts Payments
Sh. 000 Sh. 000
Subscriptions 4,400
Bar takings 20,000
Entry fees 390
Bar payables 13,700
petty cash 180
New equipment 2,000
Cash refund to members 200
Electricity and water 400
Barman's wages 1,600
Bar glasses 100
Repairs and maintenance 300
Rates and insurance 160
Honoraria to treasurer 290
Additional information
1. The club maintains a uniform gross profit margin of 25% on bar sales
2. The bar glasses are considered as revenue expense
3. The bar man is entitled to an annual bonus of 10% of bar net profit after charging the bonus
4. The petty cash was used to buy stationary only
5. Subscriptions received during the year included sh. 400,000 being arrears of previous year. It’s the policy of the club to write off arrear of more than one year
Required:
(a) Bar income statement for the year ended 31st March 2012
(b) Subscriptions account
(c) Income and expenditure account
(d) Statement of financial position as at 31st March 2012
Date posted: October 3, 2022. Answers (1)
- Ababu and Babu are partners in a bookshop business sharing profits and losses in proportion of 2/5 and 3/5 respectively. The trial balance extracted from...(Solved)
Ababu and Babu are partners in a bookshop business sharing profits and losses in proportion of 2/5 and 3/5 respectively. The trial balance extracted from the books of the partnership as at 30th April 2012 was as follows:
Sh. Sh.
Capital accounts
Ababu 4,225,000
Babu 2,600,000
Drawings
Ababu 585,000
Babu 520,000
Trade payables 832,000
Office furniture (Net Book Value) 325,000
Accounts receivables 2,632,500
Rent 243,750
Postage and telephone 276,250
Gross profit 4,628,000
Bank 910,000
Salaries and wages 1,706,250
Printing and stationary 80,600
Commission paid 325,000
Insurance 130,000
Motor Vehicles (Net Book Value) 1,680,900
Plant and machinery (net Book Value) 2,275,000
Capital (Chango) 585,000
Current Accounts
Ababu 130,000
Babu 104,000
Cost of sales 5,674,500
Cash 341,250
Inventories (30th April 2012) 812,500
5,674,500
18,648,500 18,648,500
Additional information
1. The partners agreed to admit Chango as a partner on 1 February 2012. Prior to admission, Chango was a
manager in the firm earning a salary of sh. 228,930 per annum which has been accounted for proportionately
2. Chango brought in capital of sh. 585,000 in cash and was thereafter entitled to 1/5th of the firm’s profits. The balance to be shared in the old profit sharing ratio. Chango was to stop receiving salary but was granted a minimum share of profit equal to his salary
3. Chango was also to bring his personal vehicle valued at sh. 325,000 for use in the business
4. Insurance paid in advance and rent outstanding as at 30th April 2012 were sh. 32,500 and sh. 24,050
respectively
5. Bad debts of sh. 32,500 arising before Chango’s admission was to be written off
6. A provision of 1% of outstanding debtors was to be maintained from the date of changes admission
7. Depreciation was to be provided as follows
Asset Rate
Office Equipment 15% on reducing balance
Motor vehicles 20% on book value
Plant and machinery 10% on Book value
8. Partner’s goodwill on admission of Chango’s admission was agreed at sh. 650,000 and is not to be retained in the books
9. No interest was to be allowed on capital or charged on drawings
Required:
(i) Income statement for the year ended 30th April 2012
(ii) Partner’s current accounts
(iii) Partner’s capital accounts
Date posted: October 3, 2022. Answers (1)
- “Contemporary organizations are striving to adopt professional ethics in their operations.” Identify the
common barriers to the successful adoption of ethical standards in business practice.(Solved)
“Contemporary organizations are striving to adopt professional ethics in their operations.” Identify the
common barriers to the successful adoption of ethical standards in business practice.
Date posted: October 3, 2022. Answers (1)
- Jitahidi limited was incorporated in the year 2010 and specializes in the manufacturing of electric cables branded “Nyaya”. The following trial balance was extracted from...(Solved)
Jitahidi limited was incorporated in the year 2010 and specializes in the manufacturing of electric cables branded “Nyaya”. The following trial balance was extracted from the books of the company as at 30th April 2012.
Sh. '000' sh. '000'
Inventories (1st May 2011)
Raw materials 6,000
Work in progress 7,000
Finished Goods 8,000
Purchases of raw materials 82,000
Sales 184,700
Trade receivables and payables 9,000 6,000
Bank balance 5,200
Carriage inwards 3,000
Direct Labor 16,000
Provision for unrealized profits 1,600
Electricity and water 9,600
Rates and insurance 5,200
Distribution costs 2,000
Administrative expenses 1,880
Land (cost) 45,000
Buildings (cost) 125,000
Plant and machinery (cost) 20,000
Motor vehicles (cost) 16,000
Equipment (cost) 10,000
Accumulated depreciation (1 May 2011)
Buildings 5,000
Plant and machinery 8,000
Motor vehicles 4,000
Equipment 6,000
15% debentures 8,000
Interest on debentures paid 1,200
Ordinary shares of sh. 20 each 100,000
Share premium 10,000
Retained earnings 38,780
372,080 372,080
Additional information
1. Inventories as at 30th April 2012 were as follows:
Sh.
‘000’
Raw materials 7,200
Work in progress 2,000
Finished goods 9,500
Raw materials included damaged items costing sh. 600,000 which could realize sh. 500,000 after incurring an additional cost of sh. 100,000
2. Sales included goods worth sh. 500,000 sent on sales or return basis to a customer. The customer has not confirmed. The cost price was sh. 300,000 and no record has been made.
3. It’s the policy of Jitahidi limited to transfer the finished goods to trading at cost plus a mark-up of 25%
4. Accrued electricity as at 30th April 2012 amounted to sh. 400,000 while prepaid insurance was sh. 200,000
5. Depreciation is charged on a straight-line basis as follows
Asset Rate per annum
Buildings 2%
Plant and machinery 20%
Motor vehicles 25%
Equipment 20%
6. Costs are allocated as follows
Factory (%) Distribution Costs (%) Administration expenses (%)
• Depreciation
Buildings 80 10 10
Plant and machinery 100 - -
Equipment - 50 50
Motor vehicles - 60 50
• Rates and insurance 60 20 20
• Electricity and water 60 20 20
7. A provision for corporation tax amounting to sh. 14,350,000 is to be made
Required:
Manufacturing account and income statement for the year ended 30th April 2012
Date posted: October 3, 2022. Answers (1)
- (a) In relation to public sector accounting, explain the following concepts:
(i) Fund accounting.
(ii) Commitment accounting.
(iii) Cash accounting.
(b) The following balances were extracted from the records...(Solved)
(a) In relation to public sector accounting, explain the following concepts:
(i) Fund accounting.
(ii) Commitment accounting.
(iii) Cash accounting.
(b) The following balances were extracted from the records of Ben Juma, a sole trader as at 31 March:
2011 2012
Sh. “000” Sh. “000”
Land and Buildings 2,000 2,000
Equipment 800 640
Furniture and Fittings 400 320
Motor Vehicles 1,000 750
Inventory 600 ?
Trade receivables 900 1,200
Prepaid rates 30 40
Bank 270 2,605
15% bank loan 2,000 1,000
Trade payables 450 500
Accrued electricity 50 80
Additional information
1. Total sales amounted to sh.60,000,000, while purchases amounted to sh.42,200,000. There were no cash
sales nor cash purchases.
2. Total discount allowed and discount received amounted to sh.160,000 and sh.150,000 respectively. Bad
debts written-off during the year amounted to sh.40,000
3. During the year, Ben Juma purchased a new equipment costing sh.100,000.
4. The following expenses were paid by cheque during the year:
Sh. “000”
• Staff salaries 6,035
• Rates, insurance and electricity 3,880
• Interest on loan 150
5. On 30 September 2011, Ben Juma repaid part of the loan by cheque of sh.1,000,000.
6. Ben Juma did not maintain records on cash withdrawn from the bank for personal use, so the deficit in bank is due to personal drawings.
7. Ben Juma makes a uniform gross profit to cost of sales of 3/7 every year.
Required:
(i) Income statement for the year ended 31 March 2012.
(ii) Statement of financial position as at 31 March 2012.
Date posted: September 30, 2022. Answers (1)
- (a) Outline four reasons for developing accounting standards.
(b) The following balances were included in the statement of financial position of Big Movers Limited as at...(Solved)
(a) Outline four reasons for developing accounting standards.
(b) The following balances were included in the statement of financial position of Big Movers Limited as at 1st July 2011:
Cost Accumulated depreciation Net book value
Sh. “000” Sh. “000” Sh. “000”
Land 40,000 - 40,000
Buildings 22,000 8,000 14,000
Plant and Machinery 16,000 6,000 10,000
Motor Vehicles 6,000 2,000 4,000
During the year ended 30 June 2012, the following transactions took place:
1. On 1 January 2012, a plant that had cost sh.3,000,000 and had a cumulative depreciation of sh.
2,300,000 as at 30 June 2011 was sold for sh.500,000. A new plant was then purchased at a cost of
sh.4,000,000.
2. On 1 January 2012, a professional valuer was engaged and the buildings were revalued at
sh.34,000,000.
3. On 1 April 2012, a motor vehicle was purchased at sh.300,000. Part of the purchase price was settled
by exchanging another motor vehicle at an agreed value of sh.120,000 and the balance paid for in cash.
The trade-in-vehicle had cost sh.200,000 and had a book value of sh.100,000 as at 30 June 2011.
The company charges depreciation at the following rates
Asset Rate per annum
Land -
Buildings 2% on cost
Plant and machinery 15% on cost
Motor vehicles 20% on cost
A proportionate charge is made in the year of purchase, sale or revaluation of an asset.
Required:
(i) Building account.
(ii) Provision for depreciation on building account.
(iii) Plant and machinery account.
(iv) Provision for depreciation on plant and machinery account.
(v) Motor vehicle account.
(vi) Provision for depreciation on motor vehicle account.
(vii) Property, plant and equipment movement schedule for the year ended 30 June 2012.
Date posted: September 30, 2022. Answers (1)
- (a) Summarize three advantages and three disadvantages of computerized accounting system.
(b) Alpha Limited offered 200,000 ordinary shares for subscription at sh.10 par value. The shares...(Solved)
(a) Summarize three advantages and three disadvantages of computerized accounting system.
(b) Alpha Limited offered 200,000 ordinary shares for subscription at sh.10 par value. The shares were payable as follows:
• On application - sh.2.00
• On allotment - sh.3.00
• First call - sh.2.50
• Second and final call - sh.2.50
Applications were received for 280,000 shares
The directors allotted the 200,000 shares as follows
160,000 shares - full allotment
80,000 shares - allotted 40,000 shares
40,000 shares - rejected
The money paid on application by unsuccessful applicants were refunded. However, it is the company’s
policy to retain excess application money for the partially successful applicants. The excess application money is used to reduce the allotment money due.
All the monies on both calls were received except for 5000 shares. These shares were forfeited and later reissued as fully paid at sh.9 each.
Required:
Ledger accounts to record the above transactions.
Date posted: September 30, 2022. Answers (1)