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Difficulty: HardTypes and Sources of Business Capital

Kensington Logistics Ltd. has an authorized capital of 1,000,0001,000,000 ordinary shares of ₦50₦50 each. The board of directors issued 70%70\% of these shares to subscribers. The company requested payment of ₦30₦30 per share, but the actual amounts remitted by shareholders total ₦25₦25 per share to date. What is the total value of the company's uncalled capital?

  1. ₦14,000,000₦14,000,000Answer
  2. B
    ₦3,500,000₦3,500,000
  3. C
    ₦15,000,000₦15,000,000
  4. D
    ₦17,500,000₦17,500,000

Answer

₦14,000,000₦14,000,000
The correct answer is ₦14,000,000₦14,000,000. Uncalled capital represents the portion of the nominal value of issued shares that the company has not yet requested shareholders to pay. Kensington Logistics Ltd. issued 700,000700,000 shares (70%70\% of 1,000,0001,000,000). With a nominal value of ₦50₦50 per share and a called-up amount of ₦30₦30 per share, the uncalled amount per share is ₦20₦20. Multiplying 700,000700,000 issued shares by ₦20₦20 yields ₦14,000,000₦14,000,000.

Step-by-Step Solution

1
Calculate the total number of issued shares
70%×1,000,000=700,000 shares70\% \times 1,000,000 = 700,000 \text{ shares}
Uncalled capital applies only to shares that have actually been issued to subscribers.
2
Determine the uncalled amount per issued share
₦50−₦30=₦20 per share₦50 - ₦30 = ₦20 \text{ per share}
Uncalled capital per share is the nominal value minus the called-up value per share.
3
Multiply the number of issued shares by the uncalled amount per share
700,000×₦20=₦14,000,000700,000 \times ₦20 = ₦14,000,000
This yields the total value of uncalled capital for the firm.

Key Concept

Uncalled Capital in Share Capital Structure
Estimated Time:2m 0s
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Topics

Types and Sources of Business Capital

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