Quizzes, notes and answers to questions in Accounting, Study notes of Accounting

Download Quizzes, notes and answers to questions in Accounting and more Study notes Accounting in PDF only on Docsity! UNIVERSITY OF BOTSWANA FACULTY OF BUSINESS DEPARTMENT OF ACCOUNTING AND FINANCE TEST 1 SEMESTER 1: 2017/2018 FRONT PAGE COURSE CODE: ACC 311 DURATION: 2 HOURS DATE: 27 SEPTEMBER 2017 TITLE OF PAPER: INTRODUCTION TO COMPANY ACCOUNTS SUBJECT: ACCOUNTING TITLE OF EXAMINATION: INSTRUCTIONS 1. There are TWO questions; answer ALL the questions. 2. All relevant work should be written using a PEN, not a pencil. 3. Show all workings 4. Begin each question on a new page DO NOT OPEN THIS PAPER UNTIL YOU HAVE BEEN TOLD TO DO SO BY THE SUPERVISOR/INVIGILATOR NO OF PAGES 3 (including cover page) 1 ANSWER ALL QUESTIONS: Question 1: The Statement of Financial Position (Balance sheet extract) of ABC Ltd showed the following as at 30 April 2017 P Non-current assets 320 000 Current assets: Bank 180 000 Total 500 000 Authorized Capital : 100 000 ordinary shares of P10 each 10 000 5% Redeemable Preference shares of P4 each P 1 000 000 40 000 Issued, called up and paid up capital : 30 000 ordinary shares of P10 each 10 000 5% Redeemable preference shares of P4 each 300 000 40 000 Share premium 90 000 Distributable Profits 70 000 Total 500 000 On 1 May 2017, the company decided to issue 20 000 ordinary shares of P10 each at premium of P3 per share. The instalments were collected as follows: On Application P4 per share On Allotment P5 per share (including premium) On First & Final Call P4 per share Applications were received for 50 000 ordinary shares and the company allotted shares as follows: Application money for 20 000 shares were returned in full; the balance of shares applied for were allotted on a pro rata basis. All allotment monies were received in full. One shareholder holding 2000 shares paid the first & final call money in advance along with the allotment money. When the first & final call was made all shareholders paid the call money in full except one shareholder holding 1000 shares who did not pay the first & final call money. On 1 July 2017, the company decided to forfeit the 1000 shares on which the first & final call money was not received. The cancelled shares were later reissued at P8 per share to Mr. Pelaelo who paid the money in one instalment. On 1st August 2017, the company redeemed all the 10 000 Redeemable Preference Shares at a premium of 5%. No new issue of shares were made for this purpose. These preference shares were originally issued at par. 2 Ordinary Share First and Final call Ordinary share capital (20000* P4) 80 000 Calls in advance 8 000 Bank 68 000 Forfeited shares 4 000 80 000 80 000 Forfeited shares First and Final call 4 000 Ordinary share capital 10 000 Balance c/d 6 000 10 000 10 000 Pelaelo 2 000 Balance b/d 6 000 Share premium 4 000 6 000 6 000 Pelaelo Ordinary share capital 10 000 Bank (1000*P8) 8 000 Forfeited shares 2 000 10 000 10 000 10% Preference share capital Preference share redemption 40 000 Balance b/fd 40 000 40 000 40 000 Preference share redemption Bank 42 000 10% Preference share capital 40 000 Distributable profits 2 000 42 000 42 000 Distributable Profits Capital redemption reserve 40 000 Balance b/fd 70 000 Preference share redemption 2 000 Balance c/d 28 000 70 000 70 000 Balance b/d 28 000 Capital redemption reserve Balance c/d 40 000 Distributable profits 40 000 40 000 40 000 Balance b/d 40 000 Statement of Financial Position (Balance sheet extract) Non-current assets 320 000 Bank 402 000 Total assets 722 000 Ordinary share capital 500 000 Capital redemption reserve 40 000 Share premium 154 000 Distributable profits 28 000 722 000 5 6