Question

In: Accounting

Question 1 Oovenya Ltd was incorporated on 01 September 2019 with authorized share capital consisting of...

Question 1

Oovenya Ltd was incorporated on 01 September 2019 with authorized share capital consisting of 400 000 10% preference shares of N$ 1 each and 2 000 000 ordinary shares of 50c each.

On 05 September 2019, the subscribers to the memorandum took and paid for 100 000 ordinary shares at par.

During the year of 2019, the remaining shares were offered to the public as follows:

The full public offer is underwritten by Virtual Underwritters Ltd for a 2% underwritter’s commission. The offer for the subscription of shares opened on 01 November 2019 and closed on 25 November 2019. The ordinary shares were offered at a premium of 20c per share and the preference shares were offered at par. The public subscribed for 600 000 preference shares and 1 500 000 ordinary shares and the full amounts payable were received on the closing date of 25 November 2019. All shares were allotted on 15 December 2019, the necessary refunds were made and all transactions with the underwriter were also concluded on this date. All expenses regarding the issue of shares and incorporation must be written off against the share premium account.

The balance of the share premium account as at 15 December 2019 will be as follows:

Select one:

a. N$ 276 000

b. N$ 404 000

c. N$ 380 000

Question 2

Oovenya Ltd was incorporated on 01 September 2019 with authorized share capital consisting of 400 000 10% preference shares of N$ 1 each and 2 000 000 ordinary shares of 50c each.

On 05 September 2019, the subscribers to the memorandum took and paid for 100 000 ordinary shares at par.

During the year of 2019, the remaining shares were offered to the public as follows:

The full public offer is underwritten by Virtual Underwritters Ltd for a 2% underwritter’s commission. The offer for the subscription of shares opened on 01 November 2019 and closed on 25 November 2019. The ordinary shares were offered at a premium of 20c per share and the preference shares were offered at par. The public subscribed for 600 000 preference shares and 1 500 000 ordinary shares and the full amounts payable were received on the closing date of 25 November 2019. All shares were allotted on 15 December 2019, the necessary refunds were made and all transactions with the underwriter were also concluded on this date. All expenses regarding the issue of shares and incorporation must be written off against the share premium account.

The underwritters commission payable is recorded as follows:

Select one:

a. Dr Underwriting commission 39 000 and Cr Virtual Underwritters Ltd N$ 39 000

b. Dr Bank N$ 92 000 and Cr Underwritters expense N$ 92 000

c. None of the above

d. Dr Virtual Underwritters Ltd N$ 39 000 and Cr Bank N$ 39 000

Question 3

Oovenya Ltd was incorporated on 01 September 2019 with authorized share capital consisting of 400 000 10% preference shares of N$ 1 each and 2 000 000 ordinary shares of 50c each.

On 05 September 2019, the subscribers to the memorandum took and paid for 100 000 ordinary shares at par.

During the year of 2019, the remaining shares were offered to the public as follows:

The full public offer is underwritten by Virtual Underwritters Ltd for a 2% underwritter’s commission. The offer for the subscription of shares opened on 01 November 2019 and closed on 25 November 2019. The ordinary shares were offered at a premium of 20c per share and the preference shares were offered at par. The public subscribed for 600 000 preference shares and 1 500 000 ordinary shares and the full amounts payable were received on the closing date of 25 November 2019. All shares were allotted on 15 December 2019, the necessary refunds were made and all transactions with the underwriter were also concluded on this date. All expenses regarding the issue of shares and incorporation must be written off against the share premium account.

The refund of the unsuccessful preference shares applicants will be recorded as follows:

Select one:

a. Dr Bank 100 000 Cr Preference share capital N$ 100 000

b. Dr Preference share capital N$ 100 000 and Cr Bank N$ 100 000

c. Dr Preference share capital N$ 100 000 and Cr Application and allotment: preference shares                N$ 100 000

d. Dr Application and allotment: preference shares and Cr Bank N$ 100 000

Question 4

Oovenya Ltd was incorporated on 01 September 2019 with authorized share capital consisting of 400 000 10% preference shares of N$ 1 each and 2 000 000 ordinary shares of 50c each.

On 05 September 2019, the subscribers to the memorandum took and paid for 100 000 ordinary shares at par.

During the year of 2019, the remaining shares were offered to the public as follows:

The full public offer is underwritten by Virtual Underwritters Ltd for a 2% underwritter’s commission. The offer for the subscription of shares opened on 01 November 2019 and closed on 25 November 2019. The ordinary shares were offered at a premium of 20c per share and the preference shares were offered at par. The public subscribed for 600 000 preference shares and 1 500 000 ordinary shares and the full amounts payable were received on the closing date of 25 November 2019. All shares were allotted on 15 December 2019, the necessary refunds were made and all transactions with the underwriter were also concluded on this date. All expenses regarding the issue of shares and incorporation must be written off against the share premium account.

The subscription of the ordinary shares will be recorded as follows:

Select one:

a. Dr Bank N$ 1 650 000 and Cr Application and allotment: ordinary shares N$ 1 650 000

b. Dr Bank N$ 1 050 000 and Cr Ordinary share capital N$ 1 50 000

c. Dr Bank N$ 1 050 000 and Cr Application and allotment: ordinary shares N$ 1 050 000

d. Dr Bank N$ 1 650 000 and Cr Ordinary share capital N$ 1 650 000

Question 5

At the end of an accounting period a business has valued its work in progress closing stock by including the following items:

N$000

Raw material cost in WIP

150

Carriage costs of the above goods

10

Production wages associated with this inventory

20

Production overheads associated with this inventory

30

Administration costs

5

Which is the correct figure for the valuation of closing inventory?

Select one:

a. N$215 000

b. N$180 000

c. N$210 000

d. N$150 000

Question 6

Oovenya Ltd was incorporated on 01 September 2019 with authorized share capital consisting of 400 000 10% preference shares of N$ 1 each and 2 000 000 ordinary shares of 50c each.

On 05 September 2019, the subscribers to the memorandum took and paid for 100 000 ordinary shares at par.

During the year of 2019, the remaining shares were offered to the public as follows:

The full public offer is underwritten by Virtual Underwritters Ltd for a 2% underwritter’s commission. The offer for the subscription of shares opened on 01 November 2019 and closed on 25 November 2019. The ordinary shares were offered at a premium of 20c per share and the preference shares were offered at par. The public subscribed for 600 000 preference shares and 1 500 000 ordinary shares and the full amounts payable were received on the closing date of 25 November 2019. All shares were allotted on 15 December 2019, the necessary refunds were made and all transactions with the underwriter were also concluded on this date. All expenses regarding the issue of shares and incorporation must be written off against the share premium account.

The payment by the underwriter to fulfil the term of the underwriting agreement will be recorded as follows:

Select one:

a. None of the above

b. Dr Bank N$ 251 000 and Cr Vitual Undrwritters N$ 251 000

c. Dr Vitual Underwritters   N$ 280 000 and Cr Bank N$ 280 000

d. Dr Vitual Underwriters   N$ 251 000 and Cr Ordinary share capital N$ 251 000

Solutions

Expert Solution

Figures in N$ unless indicated other wise

Computation of share premium account

Shares ssubscribed          1,500,000
Balance Underwritten              400,000
Total Shares Subscribed          1,900,000
Premium                       0.2
Total Premium              380,000
Answer 1              380,000
Computation of underwriting commission
Total Ordinary Shares issued          1,900,000
Value of shares          1,330,000
Underwiting Commission 2%
Commission on Ordinary Shares                26,600
Total Preference Shares issued              600,000
Value of shares              600,000
Underwiting Commission 2%
Commission on Ordinary Shares                12,000
Total Underwrting commission                38,600
Rounded off to                39,000
Answer 2 a
Total Preference Shares issued              600,000
Authorised Preference share Capital              400,000
Excess Subscribed to be refunded              200,000
Please note the amount in the answer is mentioned as N$ 100,000 where as it should be N$ 200,000
Answer 3 d
Total Ordinary Shares issued          1,500,000
Issue Price                     0.70
Ordinary Shares Value          1,050,000
Answer 4 C
N$ 000
Raw material cost in WIP 150
Carriage costs of the above goods 10
Production wages associated with this inventory 20
Total                      180
Answer 5 b

Answer 6 - a (Refer to working of answer 2)


Related Solutions

EcoTop Bhd was incorporated with an authorized capital of RM60,000,000 consisting of RM40,000,000 ordinary shares and...
EcoTop Bhd was incorporated with an authorized capital of RM60,000,000 consisting of RM40,000,000 ordinary shares and RM20,000,000 10% preference shares. The following is the trial balance of the company as at 31 December 2019. Debit Credit RM RM Retained profit as at 1 January 2019 12,640,000 Ordinary share capital 8,400,000 10% preference shares 4,800,000 Freehold land 8,400,000 Building (at valuation) 6,880,000 Plant and machinery (at cost) 8,400,000 Motor vehicle (at cost) 6,720,000 Accumulated depreciation as at 1 January 2019: -...
QUESTION 1 Wisliv Ltd was incorporated on the 01/06/16. The opening balance sheet of the company...
QUESTION 1 Wisliv Ltd was incorporated on the 01/06/16. The opening balance sheet of the company was as follows: Cash at bank GHS984000, share capital (60,000 ordinary shares of GHS 16.40 each) GHS984,000. During June the company intends to make payments of GHS 656,000 for a freehold property,            GHS 164,000 for equipment and GHS98,400 for a motor vehicle. The company will also purchase an initial trading stock costing GHS360,800 on credit.     The company has produced the following estimates: i....
Accounting for share capital Rippa Ltd was incorporated on 1 July 2017. The following transactions and...
Accounting for share capital Rippa Ltd was incorporated on 1 July 2017. The following transactions and events occurred during the year ended 30 June 2018: 1 Jul 2017: Rippa Ltd makes an offer to the public for investors to subscribe for 5,000,000 shares, at an issue price of $4.00 per share, with $2.50 payable on application, $1.00 being payable within one month of allotment, and $0.50 payable on a call to be made at a later date. The issue is...
Lake Ltd. was incorporated on July 1, 2013. The company is authorized to issue an unlimited...
Lake Ltd. was incorporated on July 1, 2013. The company is authorized to issue an unlimited number of preferred and common shares. The company entered into the following transactions during its fiscal year ending June 30, 2014: Jul 10 Issued 100,000 common shares for $12.50 per share. Jul 15 Issued 400,000 common shares for $13 per share. Sep 30 Issued 30,000 common shares in return for a warehouse. The common shares were trading for $15.50 on the date the warehouse...
Gundagai Ltd was incorporated on June 30, 2019. On July 1, 2019, the company issued a...
Gundagai Ltd was incorporated on June 30, 2019. On July 1, 2019, the company issued a prospectus offering 300,000 ordinary shares at an issue price of $10, payable on the following terms. $3 on application $3 on allotment $2 on the first call $2 on the second call A summary of the applications and allotments register follows. Amount paid per share on application Number of shares applied for Number of shares allotted $3.00 200,000 150,000 $6.00 100,000 100,000 $10.00 50,000...
Gundagai Ltd was incorporated on June 30, 2019. On July 1, 2019, the company issued a...
Gundagai Ltd was incorporated on June 30, 2019. On July 1, 2019, the company issued a prospectus offering 300,000 ordinary shares at an issue price of $10, payable on the following terms. $3 on application $3 on allotment $2 on the first call $2 on the second call A summary of the applications and allotments register follows. Amount paid per share on application Number of shares applied for Number of shares allotted $3.00 200,000 150,000 $6.00 100,000 100,000 $10.00 50,000...
Page Ltd. was incorporated as a private company on January 2, 2018, and is authorized to...
Page Ltd. was incorporated as a private company on January 2, 2018, and is authorized to issue an unlimited number of common shares and $1 preferred shares. The company had the following share transactions in its first month of operations: Jan. 6 Issued 197,000 common shares for $1.50 per share. 12 Issued 50,000 common shares for $1.81 per share. 17 Issued 10,200 preferred shares for $26.00 per share. 18 Issued 453,000 common shares for $2.00 per share. 24 Reacquired 190,000...
ASSIGNMENT 1 · ECON 3060 - 01 Due Date: September 4, 2019 1) The Graduate Management...
ASSIGNMENT 1 · ECON 3060 - 01 Due Date: September 4, 2019 1) The Graduate Management Admission Test (GMAT) is a standardized test used by schools to determine the aptitude of individuals who are applying for MBA programs. The range of the GMAT score is 200-800. Brian has recently taken the exam and scored 720. This is an example of _______ data. A) nominal B) ordinal C) interval D) ratio 2) A respondent of a survey indicates that she is...
Case study 5: Scenario 1: ABC S.A.O.G was incorporated with an authorized capital of 300 million...
Case study 5: Scenario 1: ABC S.A.O.G was incorporated with an authorized capital of 300 million shares, ordinary shares of 500 baiza each. The company has in issue 100 million shares. On 15-january-2017 the company has repurchased 8 million shares at the rate of 3.250 each after the completion of all the requirements posed by capital market Authority-CMA. The company re issued such shares in the march 2018 @ rate of 4.000 R.O per share. The general rules set by...
Question 4 Giant Ltd acquired 80 percent share capital of Expert Ltd. On 1 July 2018...
Question 4 Giant Ltd acquired 80 percent share capital of Expert Ltd. On 1 July 2018 for a cost of $1,600,000. As at the date of acquisition, all assets and liabilities of Expert Ltd were fairly valued except a land that has a carrying value $150,000 less than the fair value. The recorded balance of equity of Expert Ltd as at 1 July 2018 were as: Share capital $800,000 Retained earnings $200,000 General Reserve $400,000 Total $1,400,000 Additional information: ...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT