◄Unit 5 PUBLIC SECTOR ACCOUNTINGTopic 7►

Unit 6 INTRODUCTION TO COMPANY ACCOUNTS

  • Unit 6 INTRODUCTION TO COMPANY ACCOUNTS

    Key unit competence : To be able to prepare books of accounts for a

    limited Liability company

    s

    Introductory activity

    Company accounts analyses Company financial activities over a period of
    12 Months. They are prepared and maintained for every period to show
    the Company’s performance and its assets against liabilities. Unlike sole
    proprietorship or Partnerships, Company accounts records amounts from

    shares, debentures etc.

    From the knowledge acquired from the previous subjects, what do you
    think is the distinction between, a sole proprietorship, Partnership from

    Company accounts?

    6.1. Introduction to limited liability Company

    Learning Activity 6.1

    Sole proprietorship, partnership differs from companies in terms of the
    size and the share capital.

    1. What are the benefits of forming companies?

    6.1.1. Company as corporate legal body

    A company is a legal entity formed by a group of individuals to engage in
    and operate a commercial business. Similarly, a company is described as a
    voluntary association of persons who have come together for carrying on
    business and sharing the profits. Members of the company work together
    with the same goal to accomplish particular goal. The members of the Company
    are called Shareholders. They are called shareholders because they bought

    shares.

    Being considered a legal entity in the terms of the law, companies are able
    to enter into contracts, hold and dispose of property, raise capital through
    the issuance of shares, etc. The members of a company enjoy a separate and
    distinct existence from members. Unlike single traders/ sole proprietorships,

    and partnerships. The company business pays off its liabilities and debt.

    According to Rwanda’s Law Governing Companies 17/2018, company
    accounts must be filed three months after the year’s end. They frequently
    include specific guidelines on the minimal data that must be included in
    a company’s financial statements. Non-incorporated enterprises, often
    known as unlimited liability companies, frequently experience relative

    freedom from statutory regulation.

    Companies are classified into two namely ;

    1. Limited liability Company

    2. Unlimited liability Company.

    1. Limited liability Company

    What is a limited liability Company ?

    A limited company is a company limited by shares or a limited liability
    Company is form of company where the shareholders are only limited by their

    shares.

    Limited liability means that a company’s owners or investors are only liable
    for the total amount of money (in form of shares) they have invested in the
    business. The shareholders of the business will be protected in the case of
    bankruptcy if it is registered as a limited liability company. Furthermore
    «limited liability» will imply that the owner’s losses are only restricted to
    the proportion of their specific share and that they are not liable for losses
    that exceed their shares. In this case, if the company suffers losses or goes

    Bankrupt, they cannot attack their own properties.

    2. Unlimited liability

    Unlimited liability is the opposite of limited liability. Unlimited liability means
    that if the company incurs debts that it is unable to pay, the owners will be
    held personally accountable for the unpaid debts and may be required to sell

    their personal properties in order to pay back the debts.

    Characteristics of limited Companies

    1. All members have a limited liability
    2. They have a separate legal existence
    3. The debts of the company are separate from those of the shareholders
    4. Shareholders are not liable for the day to day activities of the business

    5. It can carry out any activity as long as it does not go against the law.

    Advantages of Companies

    • Shareholders enjoy limited liability
    • Larger capital is raised through larger membership
    • Risk of fraud is minimized because their accounts are audited annually.
    • They are more permanent in nature because the death or retirement
    of a
    • Shareholder does not affect the company.
    • Companies can easily access funds from financial institutions.
    • Companies operate in legal frame work-companies Act.
    Disadvantages of companies
    • They pay formation and registration costs
    • Burden of taxes : companies pay corporation tax.
    • The shares of a company are scattered and the transferability of the
    shares
    • Kills the morale of the shareholders and when the morale is down,
    the affairs of the company are not considered which gives chance to
    managers to promote their own interests.
    • Companies are difficult to form because they have to produce a number
    of documents and have to follow legal procedures before they are
    formed.
    • If profits are made, they are reduced as they have to be shared among
    shareholders.

    6.1.2. Difference between Sole trader, Partnership and Limited

    Company.

    s

    d

    Formation of registration of companies in Rwanda :

    A company is formed by incorporation. Incorporation is done by :
    • Filling appropriate forms for Memorandum of association and may
    have also
    • Articles of association given to registrar of companies with appropriate

    fees and a certificate of incorporation is issued.

    Memorandum of association is a document that shows the relationship between
    the company and the outsiders. It contains the following ;
    • The name and address of the company,
    • The objectives of the company, showing whether it is :
    – Limited or unlimited

    – Private or public and the authorized share capital

    Articles of association shows the rules and regulations for the company internal

    structure.

    It contains items like :
    • The number of directors,
    • When the annual general meetings are to be held.
    • The voting rights of the shareholders,
    • Dividends policy, and

    • Other rules.

    NOTE : It is a pre-requisite for companies to prepare Articles and Memorandum
    of Association and get them notarized by a Public Notary. One copy is retained
    at the Notary’s Office, one at the Registrar General’s Office at RDB and one at

    the Office of the Official Gazette for publication.

    Certificate of incorporation

    A certificate of incorporation is obtained at the Company registry at RDB upon
    submitting an application letter addressed to the Registrar General, a receipt
    of registration fees payable at the National Bank of Rwanda and three copies

    of the articles and memorandum of Association

    Establishing a subsidiary/branch

    Foreign companies wishing to establish a branch or a subsidiary company
    in Rwanda apply to the Minister of Trade and Industry for authorization to
    establish a branch and the Registrar General of RDB for registration in the
    registry of companies. RDB is the principal Government Agency responsible
    for facilitating investors to realize their investment projects in Rwanda
    They must present a board resolution/declaration of the company to invest in
    Rwanda, articles and memorandum of association of the parent company and

    certificate of incorporation.

    6.1.3. Shares and share capital

    Definition of shares

    A share is a unit of Capital to a company. It is the interest a shareholder or
    owner has in a company. Memorandum of association (company constitution)

    must statea fixed amount of a share.

    Types of shares

    Shares are broadly divided into two;

    • Ordinary shares

    • Preference shares.

    Ordinary shares

    Ordinary shares are those shares which do not carry a fixed rate of dividends
    and the dividend rate depends on amount of profits and directors` decisions.
    Ordinary dividends are paid after tax and after full payment of preference
    dividends. The holders of ordinary shares are called ordinary shareholders
    and they are paid ordinary dividends out the profits make by company

    business.

    Ordinary shares are considered as risk takers as they get their dividends after
    the full payment of the preference dividends. However, they are able to use

    their rights to manage the firm’s affairs by voting at meetings of the company.

    Preference shares

    Preference shares right a fixed rate of dividends out of profits distributed for
    any year and their holders claim first their dividends before ordinary shares.
    Ordinary dividends cannot be paid before preference shareholders are paid in
    full. The holders of preference shares are called preference shareholders and
    are entitled to preference dividends out of the profits made by the company
    business. In the event of a company’s liquidation, preference shareholders
    will have priority over ordinary shareholders in receiving their capital back.

    Preference shareholders do not carry a voting right.

    Types of preference shares

    Cumulative preference shares: These shares entitle their holders to a
    fixed rate of dividend. If there are not sufficient profits to pay this fixed rate
    in a particular year, arrears will be paid in the following year or at a first

    opportunity when profits are made.

    Non-cumulative preference shares: These also claim a fixed rate of
    dividend and if there are not sufficient profits to pay in a particular year their

    holders do not claim arrears in the following year.

    Example Dividends on ordinary shares and preference shares

    UMUCYO Ltd has issued 50, 000,000 ordinary shares of RWF500 each and
    20,000,000 7% preference shares of RWF100 each. Its profits after taxation
    for the year to 30 September 20X5 were RWF840 million. The management
    board has decided to pay an ordinary dividend (ie a dividend on ordinary

    shares) which is 50% of profits after tax and preference dividend.

    Required

    Show the amount in total of dividends and of retained profits, and calculate

    the dividend per share on Ordinary shares.

    Answer :

                                                                                           RWFm

    Profit after tax 840
    Preference dividend (7% of RWF100 u 20, 000,000) 140
    Earnings (profit after tax and preference dividend) 700
    Ordinary dividend (50% of earnings) 350

    Retained earnings (also 50% of earnings) 350

    The ordinary dividend is RWF7 per share (RWF350 million by 50 million

    ordinary shares).

    The appropriation of profit would be as follows :

    RWFm                                                                                                RWFm

    Profit after tax                                                                                840

    Dividends : preference                                                                140

    Ordinary                                                                                             350

                                                                                                                    490

    Retained earnings                                                                          350

    As we will see later, appropriations of profit do not appear in the statement of

    profit or loss, but are shown as movements on reserves.

    Share capital of the company

    Share capital is the amount of money a company raises by selling shares to

    public and private sources or investors.

    The company act provides that the Memorandum of association must state
    the amount of share capital with which the company has to register and the

    division of the share capital into shares of a fixed amount.

    The share capital of the company forms the permanent fund in the company

    and is reported in the balance sheet.

    The investor will then pay for and be issued with the shares and therefore,
    they become owners. Each share has a flat value called Par value/face value/

    nominal value.

    Example 1

    For example, if a company decides to set up a share capital of RWF 200,000, it

    may decide to issue :

    200,000 shares of RWF1 each per value. (200,000 x 1=200,000RWF)
    100,000 shares of RWF 2 each per value. (100,000 x 2= 200,000RWF)

    400,000 shares of RWF 0.50 each per value. (400,000 x 0.50=200,000RWF)

    Forms of share capital:

    The capital of the company is called share capital because it consists of or
    raised by selling shares. The following are forms of share capital:
    1. Authorized or registered share capital or nominal capital: This is
    the maximum amount as stated in the memorandum of association, a

    company may raise by selling shares.

    For example

    If a company wishes to sell 1,000 shares of RWF1,000 each, its authorized
    share capital is RWF. 1,000,000
    i.e number of shares *price of the share=1,000*1,000=RWF. 1,000,000
    2. Issued share capital: This is the value of the shares that have been
    issued whether or not the full amount against them has been called up.

    It is also called Subscribed capital

    For example

    If the above company has issued 600 shares for sale, the issued share capital
    would be RWF. 600,000.

    i.e number of shares *price of the share=600*1000=RWF600,000

    3. Called up share capital: This is the amount that the shareholders have
    been asked to pay. When shares are issued or allotted, a company does
    not always expect to bepaid the full amount for the shares at once. It
    might instead call up only a part of the issue price, and wait until a later

    time before it calls up the remainder.

    e.g. if the above company has asked its shareholders to pay only 600 RWF per

    share, it’s called up share capital would be 600*600 =360,000RWF.

    4. Uncalled up share capital: This is the total amount which is to be received

    in future, but which has not been asked for. 600*400=240,000RWF.

    5. Paid up share capital: This is the amount that has actually been received
    from the shareholders. Like everyone else, investors are not always
    prompt or reliable payers. When capital is called up, some shareholders
    might delay their payment (or even default on payment). Paid-up capital

    is the amount of called-up capital that has been paid.

    e.g. in the above case shareholders holding 50 shares have failed to pay a call of

    200RWF per share, the paid up would be;

    Called up                  360,000

    Less: arrears               10,000

    Paid up capital                           350,000

    6. Calls in arrears: This is total amount which has been asked i.e. (called

    for) but has not yet been paid by shareholders. 50*200=10,000 RWF

    7. Minimum share capital: This is the amount stated by the promoters
    when making application for registration of the company as the minimum

    required amount to commence trading effectively.

    Application activity 6.1

    1. What is a share?

    2. What is the difference between ordinary and preference shares?

    6.2. Accounting and adjustments of shares

    Learning Activity 6.2

    A company ABC wishes to issue shares as per stated in its memorandum
    of Association. The members only know about the market value of shares
    and they do not know about other relevant information. They need you as
    a professional accountant to give you some clarification such as:
    a) Distinguish between a share issues at par, an issue at premium, at
    a discount
    b) The market value of a share is irrelevant to the company when

    preparing its financial statements.’ Discuss this statement’

    6.2.1. Stages on issue of shares

    When the company has been registered the following stages should be taken

    for the company to be able to collect money from the public by issuing shares :

    1. Prospectus.

    When a public company plans to raise capital by selling shares to the general
    public. A copy of prospectus asks the public to submit an offer to purchase

    company share on or before the date of publication and this copy must be sent

    to the registrar of businesses for registration.

    It must provide a summary/information of the business, its track/past record,
    and the project that the company is issuing shares for. It also includes the
    starting and the closing date of the issue of shares, application fee, at the
    time of allotment and on calls, name of the Bank for application fee deposit,

    accepted minimum number of shares to be issued etc.

    2. Application

    After the public have finished reading and they are satisfied, they can apply to
    the company for the purchase of shares on the printed subscribed form. After,
    the public sends an application form together with the application money to
    specified bank account and receives a receipt. The application money cannot

    be withdrawn by the company until the allotment is done.

    3. Allotment

    Company shares are issued on the understanding that they are payable by

    installments and the following points would be considered;

    That when the public apply for shares, they send a sum of money known as
    the application money. This is not a guarantee that they will receive shares
    and this money can always be refunded to the applicants. At this stage the
    directors will send what is known as allotment letters to the successful
    applicants. These letters reflect the acceptance of the allotment of shares and

    the binding contract now exists between the company and the subscriber.

    Finally, the applications and the allotment account must only remain with the
    right nominal value expected on application and allotment. The amounts in

    these accounts is transferred to shareholder’s share capital account.

    Accounting entries made

    There are two methods by which accounting entries are made on application

    and allotment :

    Method 1

    In this first method, application and allotment account should be treated
    separately. In this case the application account records, the application money
    and allotment account records the money (share capital) from the allotted

    shares.

    Application account

    d

    Method 2 :

    Here both the application and the allotment account are treated the same and

    the accounting entries are the following ;

    1. Application money received :
    • Debit : Bank account
    • Credit : Application and allotment account
    2. Application money refund to unsuccessful applicants :
    • Debit : Application and allotment account
    • Credit : Bank account
    3. On allotment of shares
    • Debit : Application and allotment account
    • Credit : share capital account
    4. Allotment money received :
    • Bank account
    • Credit : Applicant and allotment account

    Example

    ABC ltd issued 1,000 ordinary shares each at RWF100, payable on the following

    conditions ;

    – RWF.40 on application

    – RWF. 60 on allotment

    Applications received were 1,200 shares. On 2nd March, allotment was done and
    the excess applicant were returned to the unsuccessful applicants.

    Required:     Show the journal entries and ledger a/cs to record the above
    transactions and extract a balance sheet at 31th March 2021, assuming that the

    sums of money were received in due time.

    ABC LTD

    I. The Journal

    s

    II. The ledger

    s

    6.2.2. Issue of shares

    On market shares are sold on the following conditions :

    1. At par/nominal value : This is where a share is issue at the price that is

    stated in the memorandum of association of a Company.

    2. At premium : This is where on the market the share is issued at price
    above par value of nominal value. In this case a share is issue at a premium
    and the amount of the shares is called share premium. If a company
    issue shares at a premium, they need to open a separate account called
    share premium account that appears in the credit side of the balance

    sheet.

    3. At discount : This is where shares are issued at a price lower than the

    price that is stated in the memorandum of association of the Company.

    Share premium:

    The amount at which the shares are issued may exceed their par value.
    Premium means additional cash due to the difference between the issue

    price of the share and its par value.

    When a company is first set up the issue price of its shares will probably be
    the same as their par value and so there would be no share premium. If the
    company does well, the market value of its shares will increase, but not the
    par value. The price of any new shares issued will be approximately their

    market value.

    For example, 1 : A company might issue 100,000 shares of RWF100 at a
    price of RWF120 each. Subscribers will then pay a total of RWF12, 000,000.
    The issued share capital of the company would be shown in its accounts at
    par value, RWF10, 000,000. The excess of RWF2, 000,000 is described not as
    share capital, but as share premium or capital paid-up in excess of par

    value.

    Example 2. The difference between cash received by the company and the
    par value of the new shares issued is transferred to the share premium

    account.

    i.e if Umucyo Ltd issues 1,000 RWF100 ordinary shares at RWF260 each the

    book entry will be :

                                                                                    FRW                                 FRW

    DEBIT ; Cash                                                    260,000

    CREDIT : Ordinary shares                                                                        100,000

    Share premium account                                                                          160,000

    A share premium account is an account into which sums received as

    payment for shares in excess of their nominal value must be placed.

    Once established, the share premium account constitutes capital of the
    company which cannot be paid out in dividends, i.e it is a capital reserve. The
    share premium account will increase in value if and when new shares are
    issued at a price above their par-value. The share premium account can be
    ‘used’ – and so decrease in value – only in certain very limited ways, which
    are largely beyond the scope of yourbasic financial accounting syllabus.
    One common use of the share premium account, however, is to’finance’ the
    issue of bonus shares. Other uses of this account may depend on national

    legislation.

    The reason for creating such non-distributable reserves is to maintain the capital
    of the company. This capital ‘base’ provides some security for the company’s
    creditors, bearing in mind that the liability of shareholders is limited in the
    event that the company cannot repay its debts. It would be most unjust – and
    illegal – for a company to pay its shareholders a dividend out of its base capital

    when it is not even able to pay back its debts.

    Example Share issue

    AB Co issues 5, 000,00 at 500RWF for 6, 000RWF million. What are the entries

    for share capital and share premium in the statement of financial position ?

    Share capital                                                                                  Share premium

    A. 5,000 RWF million                                                                    1,000 RWF million

    B. 1,000 RWF million                                                                    5,000 RWF million

    C. 3,500 RWF million                                                                    3,500 RWF million

    D.2, 500 RWF million                                                                     3,500 RWF million

    Solution

    Price per share is 500 RWF each (ie par value/face value /nominal value) and
    shares were issued at 1,200RWF each (ie RWF 6,000m/5 shares). Of this, 500
    RWF is the price of the share capital and 700 RWF is share premium price.

    Therefore, option D is the correct answer.

    6.2.3. Under and Over subscription of shares

    Under Subscription is defined as the situation where the number of shares
    applied by the public is less than the shares that are issued by the company.
    Companies that have just started or lack a good reputation will experience
    under-subscription.
    Oversubscription is defined as the situation where a company receives more
    applications from share buyers than the number of shares made available for
    the public. In simpler terms, oversubscription happens when the demand for
    shares exceeds the supply. Oversubscription does not always guarantee a
    company’s success, since projected success must happen in order for shares

    to remain in high demand.

    Differences between under and over subscription

    A

    Let’s consider a situation where MBC directors allot to applicants only a
    fraction of shares applied for. Following such kind of allotment, the company is
    required to refund the applicant money for the fraction of shares that are not
    allotted. On the hand, the applicants once allotted some shares, become liable
    for payment of the required balance on their allotted shares. Other than refund,
    the company therefore retains the un-used applicant money to make payment

    against the allotment money when it becomes due.

    The following are the accounting entries ;

    i. On application : record the total value of the application money received

    ii. On allotment : successful applicants (applicants who receive a fraction of

    shares applied for) will pay allotment money.

    Example : MBC ltd. Company offered 100,000 ordinary shares each of 10RWF

    at a premium of 2 RWF payable in installments.

    i. On application                                                  3RWF

    ii. ON allotment (including premium)        7RWF

    iii. On first call and final                                    2RWF

                                                                                         12 RWF

    Applicants received 130,000shares and the allotment was done as follows ;
    Applicants for 80,000 shares- full shares allotted
    Applicants for 40,000shares - 20,000 shares allotted

    Applicants for 100,000 shares - rejected

    Excess application money for partially accepted applicants is to be used to
    reduce the amount due on allotment. All money due on allotment and first and
    final call was received expect 6,000 shares allotted to Mugabo, who failed to pay

    for the first and final call.

    Workings

    a) Application money received : 130,000 shares *3 RWF=390,000 RWF,

    The number of shares offered are 100,000 less than number
    of shares applied for thus ; there is going to be a refund to

    unsuccessful applicants ie

    b) Application refund=30,000 shares*3RWF=6,000 RWF
    c) Total value payable on application and allotment=100,000shares
    *8RWF=800,000 RWF
    d) Excess on application ; 40.000shares applied were allotted 20,000
    shares ie20, 000shares *3=60,000RWF
    e) Premium cash/money=10,000 shares *2RWF=20,000RWF
    f) Received on allotment including premium=allotment due (including

    premium) - Excess application :

    100,000shares *7 RWF= 700,000

    Less : Excess application= 60,000

                                                       640,000

    g) Money received on first and final call
    94,000 shares *2 RWF= 188,000 RWF
    h) Calls in arrears =6,000*2=12,000RWF

    6.2.4 Forfeiture and reissue of forfeited shares

    Forfeiture of shares refers to the cancellation of shares allotted to the

    shareholders for non-payment.

    There are instances in business where a stakeholder loses their share due to
    non-payment of their financial liability of installments or dues. The only way

    a company can forfeit a share is if the firm’s articles of association permit it.

    Also, Shareholders whose shares are forfeited lose their shareholder rights and

    interests as well as their membership in the organization.

    A person whose shares have been forfeited ceases to be a member in respect of
    the forfeited shares but remain liable to pay the company all the monies which
    at the time of forfeit, were payable. To record forfeit of shares, open a forfeited
    shares account. The total nominal value of the shares forfeited is credited to
    this account and debited to share capital account. The amount unpaid on the

    shares in arrears account and debited to the forfeited shares account.

    Example

    UWUNO Co. Ltd have an authorized capital 1.000,000 RWF divided into 20,000
    ordinary shares of 50 RWF issued and fully paid except 200 shares held of

    MUCYO on which only 5,000RWF has been paid.

    Following many reminders and demands for payment, the board of directors

    made a decision to forfeit the shares held by MUCYO.

    Required :

    Show the journal entries in the company’s journal and ledger recording the

    forfeiture of shares.

    Solution

    Journal entries

                                                                                                                                            Dr                                           Cr

    Ordinary share capital account                                                                    10,000

    Forfeited shares account                                                                                                                                      10,000

    (200 ordinary shares of RWF 50 each forfeited

    For non-payment of call as per resolution of directors)

    Forfeit shares account                                                                                      5,000

    Calls in arrears account                                                                                                                                         5,000

    (Calls in arrears RWF 25 per share on 200

    Ordinary shares forfeited)

    S

    Re-issue of forfeited shares

    If shares are forfeited the membership of the shareholder stands cancelled and
    the shares become the property of the company. Thereafter, the company has
    an option of selling such forfeited shares. The sale of forfeited shares is called
    ‘reissue of shares’
    Therefore, re-issue of shares is the selling of forfeited shares. When re-issuing
    shares the new purchaser must be pay the shares at the nominal value. if shares
    are re-issued at the value above the nominal value, the surplus should go to
    share capital account and the following are the necessary accounting entries;
    1. Debit : forfeited shares re-issued account

    Credit : Share capital account

    (With nominal value of shares re-issued)

    2. Debit : Forfeited shares account

    Credit : forfeited shares re-issued account

    (With amount received before to forfeiture in respect of shares re-issued)

    3. Debit : Bank account

    Credit : Forfeited shares re-issued account

    (With amount received on re-issue of forfeited shares)

    4. Debit : Forfeited shares re-issued account

    Credit : Shares premium account

    (With the balancing figure on the forfeited shares re-issued account)

    Example

    UCOMO Company ltd issued 3,000 ordinary shares of RWF10 at RWF 120 each

    as shown below ;

    On application RWF 3

    On allotment RWF 5 (including premium)

    On first and final call RWF 4

    Applications were received and the allotment was med to successful applicants.
    All the installments were paid expect the first and final call of RWF for 1,000
    shares held by MUHIMA whose shares were forfeited on 10th August 2021 and

    re-issued on 19th September 2021each at RWF 8.

    Required :

    Show the following accounts as they appear in the ledger

    i. Forfeited share account

    ii. Forfeited shares re-issued account

    NOTE : Ignore completing double entry in the rest of the accounts

    S

    Working ;

    i. Calls in arrears forfeited =1,000 shares *RWF 4=RWF4, 000
    ii. Amount received before forfeiture
    Application 1,000 shares *RWF 3=RWF 3,000
    Allotment 1,000 shares * RWF3=RWF 6,000
    iii. Amount received on re-issue=1,000 shares *RWF 8=RWF8, 000
    iv. Nominal value of re-issued shares=1,000shares*RWF 10=RWF10, 000
    v. Share premium on re-issue =1,000 shares*RWF2=RWF12, 000

    Application activity 6.2

    1. A company issues five million RWF100 shares at a price of RWF125
    per share. How much should be posted to the share premium
    account?
    A. RWF 5 million
    B. RWF 1.25 million
    C. RWF 6.25 million
    D. RWF 6 million
    5. KAMANI co.ltd has the authorized share, 500,000 @ 120RWF
    per share, and shares issued were 380,000. The company asked
    shareholders to pay 100RWF per share who actually paid 80RWF

    per share.

    Required:

    Calculate for the following;
    i. Authorized share capital
    ii. Issued share capital
    iii. Called up share capital
    iv. Uncalled share capital

    v. Paid-up share capital

    End unit assessment 6

    1. UTC Ltd. Co.ltd issues 100000 equity shares of face value of 100 RWF
    on 1st June 2018 at 20% premium. The arrangements for payment
    are:
    June 1, 2018: On Application 20RWF
    July 1, 2018: On Allotment including Premium 70RWF
    September 1, 2018: On First and final call 30RWF
    The company receives applications for 285000 shares. This is a case of
    oversubscription. It deals with them in the following manner:
    1. Applicants for 25000 shares receive a full allotment.
    2. The applicants for 225000 shares receive one share for every three
    shares applied for on pro-rata basis.
    3. It rejects the applications for 35000 shares.
    The company duly receives the entire amount. Pass necessary journal

    entries.

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    ◄Unit 5 PUBLIC SECTOR ACCOUNTINGTopic 7►