a. Describe theprovisions of the law in case a company wishes to issue shares at a discount (3…
b. Describe the assumptions of the law in case of lack of a partnership deed (3 marks)
c. Describe the unique problems faced by small businesses in the maintenance of accounting records (2 mark)
d. A company with an authorized share capital of 50 million ordinary shares of Ksh.1 each and had the following transactions during the year ended 31st Dec.2011:
i. On 31st March 2011 invited applications for 5million shares of sh.1 at sh.3.20 per share analyzed as follows: on application sh.1.90 and on allotment Kshs.1.00 and on 1st and final call sh.0.30 per share. ii. On 2nd May 2011, applications were received for 6.2 million shares but only 5.5 million shares were accepted by the company and unsuccessful applicants were given refunds on 15th May 2011.
Allotment was done on 31st May 2011 for successful applicants. iii. Received funds for the allotment call on 2nd June 2011 whose allotment was done on 15th June 2011. On 5th July 2011 received funds for 1st and final callwith exception of a shareholder who had applied for 300,000 shares was unable to pay the call hence the shares were forfeited then cancelled on 15th August 2011.
iv. The forfeited shares were re-issued for Kshs.1.00 each on 1st September 2011.
Required: Journalize the above transactions (10 marks)
e. The trial balance of Saints Sports Club at 31st Dec.2012 was as follows:
| Kshs.000 | Kshs.000 | ||||||||
| Gym Equipment (cost) | 1,630 | ||||||||
| Bar furniture and fittings | 2,000 | ||||||||
| Bar rent | 600 | ||||||||
| Motor van | 1,204 | ||||||||
| Profit from raffles | 1,150 | ||||||||
| Subscriptions received | 1,600 | ||||||||
| Wages to bar staff | 1,090 | ||||||||
| Bar stocks on 1st Jan.2012 | 960 | ||||||||
| Bar purchases and sales | 2,360 | 4,540 | |||||||
| General expenses | 1,200 | ||||||||
| Club insurance | 500 | ||||||||
| Cash at bank | 1,126 | ||||||||
| Accumulated fund | 5,380 | ||||||||
| 12,670 | 12,670 | ||||||||
Notes: i. Bar stocks at 31st Dec.2012 were valued at Kshs.300,000.
ii. Subscriptions paid in advance by members amounted to Kshs.150,000 iii. Accrued subscriptions income amounted to Kshs.500,000 by end of year iv. Depreciation on motor vehicle, furniture and equipment is to be provided at 20% per annum on cost
Required:
(i) Net profit / loss from the bar on 31st December 2012
(ii) Income and Expenditure account and Balance sheet on 31st December 2012 (12 marks)
