Question

9. The authorised capital of Babs Company Limited is 200,000 ordinary shares. The company decided to issue 180,000 of the shares 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 instalments 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.

Accepted Answer

(a) Bank Account: Application receipts $80,000, Allotment $126,000, First and final call $162,000 = total receipts $368,000, less refund to unsuccessful applicants $8,000, leaving Bal b/d $360,000.
(b) Ordinary Share Application Account: Bank (refund) $8,000 and transfer to Ordinary Share Capital $72,000, total $80,000 = Bank (application receipts) $80,000.
(c) Allotment Account: Ordinary Share Capital $126,000 = Bank $126,000.
(d) First and Final Call Account: Ordinary Share Capital $162,000 = Bank $162,000.
(e) Ordinary Share Capital Account: Bal c/d $360,000 = Ordinary share application $72,000 + Allotment $126,000 + First and final call $162,000 = $360,000.

WAEC Accounting 2021 Theory — Question 9

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