Mada za sehemu hiiCompany AccountsMada 7
Amount received in full at application stage. Accounting entries for shares issued at par and the amount received in full at application stage are as follows:
When full amount is received at an application stage, based on shares applied
Dr. Bank account xx Cr. Share capital account xx (With the nominal value of shares applied for)
Example
BINAMU Ltd. has an authorized share capital of 25,000,000 equity shares of TZS 1,000 each, of these 1,000,000 shares were issued at par to the public for subscription. All shares were subscribed and amount paid in full at application stage on 15th January, 2022.
Required: Open up the ledger accounts to record the above transactions in the books of BINAMU Ltd. for the year ended 31st December, 2022.
Bank Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th Jan, 2022 | Balance b/d | 1,000,000 | 31st Dec, 2022 | Balance c/d | 1,000,000 |
| 1st Jan, 2023 | Equity share capital | 1,000,000 |
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|
| 31st Dec, 2022 | Balance c/d | 1,000,000 | 15th Jan, 2022 | Bank | 1,000,000 |
| 1st Jan, 2023 | Balance b/d | 1,000,000 |
Normally, the share premium is recognized at allotment stage. However, the premium can also be recognized at a call stage. Accounting entries to record premium on issue are as follows:
- When the premium is recognized at allotment stage Dr. Allotment account xx Cr. Share Premium account xx (With the premium element relating to the allotment money received)
- When the premium is recognized at the call stage Dr. Call account xx Cr. Share Premium account xx (With the premium element relating to the call money received)
Example
BINAMU Ltd. has an authorized capital of 25,000,000 equity shares of TZS 1,000 each, of these 1,000,000 shares were issued to the public for subscription at TZS 1,100 per share. All shares were subscribed and fully paid for at application stage on 15th January, 2022.
Required: Prepare ledger accounts to record the above transactions in books BINAMU Ltd. for the year ended 31st December, 2022.
Solution
Bank Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th Jan., 2022 | Equity Share Capital | 1,000,000 | 31st Dec., 2022 | Balance c/d | 1,100,000 |
| 15th Jan., 2022 | Share Premium | 100,000 | |||
| 1st Jan., 2023 | Balance b/d | 1,100,000 |
Equity Share Capital Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th Jan., 2022 | Bank | 1,000,000 | 31st Dec., 2022 | Balance c/d | 1,000,000 |
| 1st Jan., 2023 | Balance b/d | 1,000,000 |
Share Premium Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th Jan., 2022 | Bank | 100,000 | 31st Dec., 2022 | Balance c/d | 100,000 |
| 1st Jan., 2023 | Balance b/d | 100,000 |
Example
BINAMU Ltd. has an authorized capital of 25,000,000 equity shares of TZS 1,000 each, of these 1,000,000 shares were issued to the public for subscription at TZS 1,100. All shares were subscribed for and the payments were as follows:
- TZS 500 at application stage on 15th January, 2022;
- TZS 400 (including premium) at allotment stage on 15th February, 2022; and
- TZS 200 at first call stage on 15th March, 2022;
Required: Open up ledger accounts to record the above transactions in books BINAMU Ltd. for the year ended 31st December, 2022.
Solution
Bank Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th Jan., 2022 | Application | 500,000 | 31st Dec., 2022 | Balance c/d | 1,100,000 |
| 15th Feb., 2022 | Allotment | 400,000 | |||
| 15th March, 2022 | First Call | 200,000 | |||
| 1st Jan., 2023 | Balance b/d | 1,100,000 |
Application Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th Feb., 2022 | Equity Share Capital | 500,000 | 15th Jan., 2022 | Bank | 500,000 |
Equity Share Capital Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 31st Dec., 2022 | Balance c/d | 1,000,000 | 15th Feb., 2022 | Application | 500,000 |
| 15th Feb., 2022 | Allotment | 300,000 | |||
| 15th March, 2022 | First Call | 200,000 | |||
| 1st Jan., 2023 | Balance b/d | 1,000,000 |
Allotment Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th Feb., 2022 | Share Capital | 300,000 | 15th Feb., 2022 | Bank | 400,000 |
| 15th Feb., 2022 | Share Premium | 100,000 |
Share Premium Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 31st Dec., 2022 | Balance c/d | 100,000 | 15th Feb., 2022 | Allotment | 100,000 |
First Call Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th March, 2022 | Equity Share Capital | 200,000 | 15th March, 2022 | Bank | 200,000 |
Accounting entry to record amount of discount on issue of shares is as follows:
Recognition of discount on issues in the share price
Dr. Discount on Issue of shares account xx Cr. Allotment or call account xx (With discount offered on the shares issued)
Example
BINAMU Ltd. has an authorized capital of 25,000,000 equity shares of TZS 1,000 each, of these 1,000,000 shares were issued to the public at TZS 850. All shares were subscribed for, and the payments were as follows:
- TZS 500 at application stage on 15th January, 2022;
- TZS 300 at allotment stage on 15th February, 2022; and
- TZS 50 at first call stage on 15th March, 2022.
Required: Open the ledger accounts to record the above transactions for the year ended 31st December, 2022.
Solution
Bank Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th Jan., 2022 | Application | 500,000 | 31st Dec., 2022 | Balance c/d | 850,000 |
| 15th Feb., 2022 | Allotment | 300,000 | |||
| 15th March, 2022 | First Call | 50,000 | |||
| 1st Jan., 2023 | Balance b/d | 850,000 |
Application Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th Feb., 2022 | Equity Share Capital | 500,000 | 15th Jan., 2022 | Bank | 500,000 |
Equity Share Capital Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 31st Dec., 2022 | Balance c/d | 1,000,000 | 15th Feb., 2022 | Application | 500,000 |
| 15th Feb., 2022 | Allotment | 300,000 | |||
| 15th Feb., 2022 | Discount on Issue | 150,000 | |||
| 15th March, 2022 | First Call | 50,000 | |||
| 1st Jan., 2023 | Balance b/d | 1,000,000 |
Allotment Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th Feb., 2022 | Equity Share Capital | 300,000 | 15th Feb., 2022 | Bank | 300,000 |
Share Discount Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th Feb., 2022 | Equity Share Capital | 150,000 | 1st Jan., 2023 | Balance b/d | 150,000 |
| 31st Dec., 2022 | Balance c/d | 150,000 |
First Call Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th March, 2022 | Equity Share Capital | 50,000 | 15th March, 2022 | Bank | 50,000 |
When a call is due, the company will remind shareholders to pay money related to the specific stage. However, on due date it may happen that some shareholders may fail to pay the related call money. The amount unpaid is called call in arrears and is recognized in the calls in arrears account. Basically, calls in arrears account is a receivable's account, representing the amount shareholders are owed by the company. Thus the calls in arrears account should always have a debit balance. At the statement of financial position date, if the arrears are still outstanding, should be shown in the statement of financial position as a reduction to the issued share capital.
Accounting entries to record amount of call unpaid by shareholders are as follows:
- Recognition of unpaid amount of the share price in the call in arrears account, when the unpaid amount relates to allotment stage. Dr. Calls in arrears account xx Cr. Allotment account xx (With unpaid amount related to allotment stage)
- Recognition of unpaid amount of the share price in the call-in arrears account, when the unpaid amount relates to call stage. Dr. Calls in arrears account xx Cr. Call account xx (With unpaid amount related to call stage)
Example
BINAMU Ltd. has an authorized capital of 25,000,000 equity shares of TZS 1,000 each, of these 1,000,000 shares were issued to the public at TZS 1,100. All shares were subscribed and the payments were as follows:
- TZS 500 at application stage on 15th January, 2022;
- TZS 400 (including premium) at allotment stage on 15th February, 2022; and
- TZS 200 at first call stage on 15th March, 2022
Shareholders who applied for 2,000 shares failed to pay allotment and first call money on due date
Required: Open up the ledger accounts to record above transactions in books of BINAMU Ltd. for the year ended 31st December, 2022.
Solution
Bank Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th Jan., 2022 | Application | 500,000 | 31st Dec., 2022 | Balance c/d | 1,098,800 |
| 15th Feb., 2022 | Allotment (W1) | 399,200 | |||
| 15th March, 2022 | First Call (W2) | 199,600 | |||
| 1st Jan., 2023 | Balance b/d | 1,098,000 |
Application Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th Feb., 2022 | Equity Share Capital | 500,000 | 15th Jan., 2022 | Bank | 500,000 |
Equity Share Capital Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 31st Dec., 2022 | Balance c/d | 1,000,000 | 15th Feb., 2022 | Application | 500,000 |
| 15th Feb., 2022 | Allotment | 300,000 | |||
| 15th March, 2022 | First Call | 200,000 | |||
| 1st Jan., 2023 | Balance b/d | 1,000,000 |
Allotment Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th Feb., 2022 | Share Capital | 300,000 | 15th Feb., 2022 | Bank | 399,200 |
| 15th Feb., 2022 | Share Premium | 100,000 | |||
| 15th Feb., 2022 | Call in Arrears | 800 |
Share Premium Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 31st Dec., 2022 | Balance c/d | 100,000 | 15th Feb., 2022 | Allotment | 100,000 |
First Call Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th March, 2022 | Equity Share Capital | 200,000 | 15th March, 2022 | Bank | 199,600 |
| 15th March, 2022 | Calls in Arrears | 400 |
Call in Arrears Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th Feb., 2022 | Allotment | 800 | 15th March, 2022 | First Call | 400 |
| 1st Jan., 2023 | Balance b/d | 1,200 |
When a demand for payment is made, some shareholders may decide to pay at that stage the whole or the next calls money ahead of time, i.e. before the time fixed for the calls to accrue for their payment. The amount paid ahead of time should not be treated as share capital but as liability and it should be accounted for in the 'calls in advance account'. The account will always have a credit balance. The advance payment can be paid together with the allotment and/or on calls stages. When the time for the call becomes due, the advance payment will be recognized as share capital or share premium as the case may be and would be transferred from calls in advance account to the respective call account. If at the end of the period, the calls in advance have not yet matured, it should be shown separately as a liability in the statement of financial position.
Accounting entries to record amount paid in advance by shareholders are as follows:
- If the amount of advance received with respect to allotment stage Dr. Allotment account xx Cr. Calls in Advance account xx (With amount paid ahead of time at allotment stage)
- If the amount of advance received with respect to call stage Dr. Allotment/Nth Calls account xx Cr. Calls in Advance account xx (With the amount paid ahead of time at a calls stage)
- On due date for receiving respective call money Dr. Calls in Advance account xx Cr. Allotment/Nth Calls account xx
Example
BINAMU Ltd. has an authorized capital of 25,000,000 equity shares of TZS 1,000 each, of these 1,000,000 shares were issued to the public at TZS 1,100. All shares were subscribed for, and the payments were as follows:
- TZS 500 at application stage on 15th January, 2022;
- TZS 400 (including premium) at allotment stage on 15th February, 2022;
- TZS 200 at first and final call stage on 15th March, 2022.
Shareholders with 4,000 shares paid first call money at the allotment stage.
Bank Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th Jan., 2022 | Application | 500,000 | 31st Dec., 2022 | Balance c/d | 1,100,000 |
| 15th Feb., 2022 | Allotment (W1) | 400,800 | |||
| 15th March, 2022 | First Call (W2) | 199,200 | |||
| 1st Jan., 2023 | Balance b/d | 1,100,000 |
Application Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th Feb., 2022 | Equity Share Capital | 500,000 | 15th Jan., 2022 | Bank | 500,000 |
Equity Share Capital Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 31st Dec., 2022 | Balance c/d | 1,000,000 | 15th Feb., 2022 | Application | 500,000 |
| 15th Feb., 2022 | Allotment | 300,000 | |||
| 15th March, 2022 | First Call | 200,000 | |||
| 1st Jan., 2023 | Balance b/d | 1,000,000 |
Allotment Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th Feb., 2022 | Equity Share Capital | 300,000 | 15th Feb., 2022 | Bank | 400,800 |
| 15th Feb., 2022 | Share Premium | 100,000 | |||
| 15th Feb., 2022 | Call in Advance | 800 |
Share Premium Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 31st Dec., 2022 | Balance c/d | 100,000 | 15th Feb., 2022 | Allotment | 100,000 |
First Call Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th March, 2022 | Equity Share Capital | 200,000 | 15th March, 2022 | Bank | 199,200 |
| 15th March, 2022 | Call in Advance | 800 |
Call in Advance Account
| Date | Details | Amount (TZS '000) | Date | Details | Amount (TZS '000) |
|---|---|---|---|---|---|
| 15th March, 2022 | First Call | 800 | 15th Feb., 2022 | Allotment | 800 |
Mwalimu
Unasoma somo hili? Niulize nikuelezee chochote kilichomo.
Ingia ili kumuuliza Mwalimu wa AI wa Sonza kuhusu mada hii.
Ingia ili kuulizaMajadiliano
Hakuna maswali bado