Question

Q1. SISKO & Co. Ltd commences business and issues one million shares with a nominal value of Le3 each. The company allows its allottees to pay Le1.25 on allotment and the remainder at a later date. All the allottees chose to do this and all the shares are sold. What is JEMILEX & Co. Ltd's paid-up share capital? A. Le1.25 million B. Le3 million C. Le1.75 million D. Le500,000 Q2. Cash Balance Le15,000; Trade Receivables Le35,000; Inventory Le40,000; Trade Payables Le24,000 and Bank Overdraft is Le6,000. Current Ratio will be : (A) 3.75:1 (B) 3:1 (C) 1:3 (D) 1 : 3.75​

Answer 1

SISKO & Co. Ltd.

1. The paid-up share capital is:

A. Le1.25 million

2. Current Ratio will be:

(B) 3:1

Step-by-step explanation:

a) Data and Calculations:

Issued share capital = 1,000,000 shares

Allotment = Le1.25 per share

Paid-up share capital = Le1.25 million (Le1.25 * 1,000,000)

Current Ratio:

Cash Balance Le15,000

Trade Receivables Le35,000

Inventory Le40,000

Total current assets Le90,000

Current liabilities:

Trade Payables Le24,000

Bank Overdraft Le6,000

Total current liabilities Le30,000

Current ratio = Current assets/Current liabilities

= Le90,000/Le30,000

= 3:1