Koko Industrial Plc offered 100,000 ordinary shares of \text{₦}2.00 nominal value each at … — JAMB UTME

Koko Industrial Plc offered $100,000$ ordinary shares of $\text{₦}2.00$ nominal value each at a premium of $20\%$ . Payments were structured as follows:
- On application: $\text{₦}0.80$
- On allotment: $\text{₦}1.00$ (including the full share premium)
- On final call: $\text{₦}0.60$

If all shares were fully subscribed and allotted, what amount should be credited to the Ordinary Share Capital Account in respect of the allotment stage?

$\text{₦}60,000$ Answer
B
$\text{₦}100,000$
C
$\text{₦}40,000$
D
$\text{₦}80,000$

Answer

\text{₦}60,000

The option stating

\text{₦}60,000

is correct because the allotment amount of

\text{₦}1.00

per share consists of a

\text{₦}0.40

premium (

20\%

of nominal value

\text{₦}2.00

) and a

\text{₦}0.60

capital element. For

100,000

shares, the amount credited to Ordinary Share Capital is

100,000 \times \text{₦}0.60 = \text{₦}60,000

Step-by-Step Solution

Calculate the share premium per share

\text{Share Premium per share} = 20\% \times \text{₦}2.00 = \text{₦}0.40

Share premium is computed as the given percentage applied to the nominal (face) value per share.

Determine the nominal (capital) portion payable on allotment per share

\text{Capital component on allotment} = \text{Total Allotment Price} - \text{Share Premium per share} = \text{₦}1.00 - \text{₦}0.40 = \text{₦}0.60

Only the face value portion of share calls/allotments is credited to the Ordinary Share Capital Account.

Calculate total credit to Ordinary Share Capital Account on allotment

\text{Total Share Capital Credit} = 100,000 \text{ shares} \times \text{₦}0.60 = \text{₦}60,000

Multiplying the nominal capital portion per share by the total number of allotted shares gives the total credit entry.

Key Concept

Accounting entries for issue of shares at a premium across installment stages

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