(a) Amatco Ltd has an authorized capital of 6,000,000 ordinary shares of D5.00 per share. It issued 3,000,000 ordinary shares and all such shares were bough...
Question 1 Report
(a) Amatco Ltd has an authorized capital of 6,000,000 ordinary shares of D5.00 per share. It issued 3,000,000 ordinary shares and all such shares were bought and paid for at D2.00 a share except 1,000 shares taken by Mr. Jones. Calculate the value of the: (i) authorized capital (ii) issued capital (iii) called-up capital (iv) paid-up capital.
(b) The following are the assets and liabilities of Morgan's Ltd:
| N | |
| cash | 8,000 |
| Building | 81,000 |
| Creditors | 6,500 |
| sales returns | 12,000 |
| Debtors | 18,000 |
| Capital | 122,000 |
| Overdraft | 11,000 |
| Motor vehicle | 20,000 |
| sales | 50,000 |
| Net profit | 20,000 |
Answer Details
(a) Amatco Ltd
Authorized capital: 6,000,000 ordinary shares of D5.00 each (nominal value D5.00). Issued: 3,000,000 shares. Amount called and paid: D2.00 per share, except 1,000 shares taken by Mr. Jones who has not paid.
(i) Authorized capital = Number of authorized shares x nominal value
= 6,000,000 x D5.00 = D30,000,000
(ii) Issued capital = Shares issued x nominal value
= 3,000,000 x D5.00 = D15,000,000
(iii) Called-up capital = Issued shares x amount called per share
= 3,000,000 x D2.00 = D6,000,000
(iv) Paid-up capital = Called-up capital - Calls in arrears
Calls in arrears (Mr. Jones) = 1,000 x D2.00 = D2,000
= 6,000,000 - 2,000 = D5,998,000
(b) Morgan's Ltd - assets and liabilities
No specific requirement was stated for this part, so the items are classified below and the derivable figures shown. Sales (50,000), sales returns (12,000) and net profit (20,000) are trading/profit items rather than balance-sheet assets or liabilities.
| Item | N | Classification |
|---|---|---|
| Building | 81,000 | Fixed asset |
| Motor vehicle | 20,000 | Fixed asset |
| Debtors | 18,000 | Current asset |
| Cash | 8,000 | Current asset |
| Creditors | 6,500 | Current liability |
| Overdraft | 11,000 | Current liability |
Fixed assets = 81,000 + 20,000 = N101,000
Current assets = 18,000 + 8,000 = N26,000
Current liabilities = 6,500 + 11,000 = N17,500
Working capital = 26,000 - 17,500 = N8,500
Download The App On Google Playstore
Everything you need to excel in your exams
