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Account Third Term Scheme of Work and Lesson Notes for Senior Secondary School Two( SSS 2)

Third Term Scheme of Work Account for SSS 2

  1. Acquisition/ purchase of Business: Purchase consideration & Good,Meaning, Reasons for acquisition, format of new business account.
  2. Purchase of a new business- format, preparation of a new business account
  3. Company Amalgamation- Reasons, process and working exercise
  4. Companies formation, private, public, quoted and unquoted companies
  5. Nigeria financial system- meaning, component, features, operators, money market and capital market functions
  6. Type of shares, issues of shares, distinctions between classes of shares, issue of at par, discount and premium
  7. Preparation of account for issue of shares at par, discount and premium bonus shares, right issues
  8. Loan capital- debentures, types, distinction between shares and debenture, preparation of accounts relating to issuing of all classes of shares
  9. capital market- Requirement for enlisting in capital market, second tier, security market. Advantages of capital market to individuals, investors, government, economy, companies.
  10. Revision
  11. Examination

LESSON NOTE FOR THE FIRST WEEK ENDING 27TH APRIL 2020

CLASS- SS2

DURATION- 40MIP

NOS OF PERIOD- 4

TOPIC- ACQUISITION AND PURCHASE OF A BUSINESS

OBJECTIVES: The student should be able to:

  • Explain the meaning of acquisition of business
  • Identify and explain terminologies use in the purchase of business
  • State the accounting entries in purchase of business

PREVIOUS KNOWLEDGE: The students are familiar with the sales and acquisition of fixed asset

INSTRUCTIONAL MATERIAL: White board and marker

REFERENCE MATERIALS: Simplified and Amplified book-keeping and Accounting by Longe Femi, Essential financial Accounting for SS3 by R.A Kazeem and O.A. Longe

CONTENT:

Purchase at a business is the process involved in the acquisition of an existing business in a company.

TERMINOLOGY:

  1. Purchase consideration: This is the money paid by the purchaser to the vender in order to acquire his business
  2. Vendor: The person or firm that sales its business to another firm company
  3. Goodwill: Goodwill is the excess of the purchase consideration over the value of asset
  4. Capital Reserve: capital reserve is the excess of identifiable assets or net value of assets over the purchase consideration
  5. Promoter: the person or firm that acquire a business and sell it to another company at a profit

ACCOUNTING ENTRIES

  1. Agreed purchase price

Dr: Business purchase accounting

Cr: Vendor accounting with agreed price

  • Take over value of assets

Dr: Assets account

Cr: Business purchase with the value of assets taken over

  • Agreed valuation of liabilities taken over

Dr: Business purchase account and

Cr: Liabilities account with agreed valuation of liabilities taken over

  • Excess of purchase consideration over net assets

Dr: Goodwill account

Cr: Business purchase account

  • Settlement of the vendor’s account with cash:

Dr: Vendor account

Cr: Bank account

  • Excess of assets over consideration

Dr: Business purchase account

Cr: Capital reserve account

  • Settlement of vendor’s account with shares

Dr: Vendor account

Cr: Shares capital account

FORMAT:

Dr                                                Vendor Account

                                                   N Bank                                           X Shares                                       X                                                    XX                                                      N Purchase consideration              X                                                      _____                                                   XX  

                                            Business Purchase Account

                                                     N Liabilities take over                    X Purchase price                           X Capital reserve                           X                                                       XX                                                      N Assets take over                         X Goodwill                                                                                   ______                                                   XX

Liabilities Account

                                                     N                                                        N Business Purchase Plc

Assets Account

                                                     N Business Purchase                                     x                                                      N  

Bank Account

                                                     N                                                      N Vendor                                                    x

Share Capital Account

                                                     N                                                   N Amount paid to vendor                    x                    

  Goodwill Account

                                                     N Business Purchase A/C                          x                                                      N  

Capital Reserve Account

                                                     N                                                   N Purchase A/C                                   x                     

Balance sheet as at year ended

                                                  N Capital                                                  x Capital reserve                                  x Creditors                                             x                                                                X                                                 N Fixed Assets                                      x Current Assets                                 x Good will                                           x                                                         ___                                                          x
Assets:            Fixtures            Motor van            Debtors            Stock            Goodwill Liabilities  Creditors            Purchase consideration Asset and Liabilities taken over Dr x x x x x     Cr           x x
           Purchase of business            Vendor A/C Agreed purchase price x   x
           Vendor A/C            Bank A/C            Share Capital A/C Cash or share paid in full settlement x   x x

 Presentation:

Step 1:        Revision of last term work

Step 2:        Introduction of the new topic

Step 3:        Explanation of the new topic

Step 4:        General Class discussion

Step 5:        Summary of the lesson

EVALUATION

  1. What is acquisition of business?
  2. Mention at least four terminologies used in purchase of business
  3. What is the accounting entries of purchase of business paid by cash?

Assignment

  1. Explain the following terms
  2. Goodwill (b) purchase price            (c) promoter            (d) Vendor   

(e) State the accounting entries for the following

(a)       Purchase consideration

(b)       Assets taken over

(c)       Liabilities taken over

(d)       Payment of purchase price with share.

Conclusion:  The teacher summarizes the lesson and gives the students note on the subject matter.

LESSON NOTE FOR SECOND WEEK ENDING

CLASS                                     –        SS2

DURATION                              –        40 M/P

NUMBER OF PERIOD               –        4

TOPIC – PURCHASE OF BUSINESS

OBJECTIVES – The students should be able to:

  • Solve problems relating to purchase of business

PREVIOUS KNOWLEDGE – The students have been taught the meaning and accounting entries in purchase of a business.

INSTRUCTIONAL MATERIALS – White board and marker

REFERENCE MATERIAL – Essential financial Accounting for SSS 1- 3 BY R.A. Kazeem  and O.A. Longe

CONTENT

Bolu and Bassey entered into partnership sharing profit and losses equally to acquire the business carried on by Yakubu- The business was taken over on 1/1/2015 which is shown below.

Balance sheet

                                       N          N Capital                                    260,000 Current liabilities                 Creditors                              34,000                                                                                                                    294,000                                                           N              N Fixed Assets: Premises                         142,000 Plant & machine             81,000 Furniture                        6000  229000 Current Assets Stock                                 4100 Debtors                             24000     65000                                                            294,000

Additional Information:

  • The purchase consideration consideration/price agreed was N280,000 and was paid equally by Bola and Bassey direct to Yakubu.
  • Bank account was opened in the name of the firm into which each partners paid the sum of N10,000.
  • For the purpose of the partnership, the assets were revealed and the following reduction in value were made.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            N

Plant and machine                                                                                                5000

Furniture and fittings                                                                                           2000

Stock                                                                                                                         4500

You are required to prepare

  • The necessary journal entries to record the above transaction
  • A balance sheet as at the commencement of the new partnership.

Solution

                                                                                                                                    N

Purchase consideration                                                                                     280,000

Assets taken over:

Plant & machine (8100-5000)                                                                            76,000

Furniture & fittings (6000 – 2000)                                                                    4,000

Stock                         (41000-4500)                                                                      14,200

Premises                                                                                                                  27,000

                                                                                                                                    282,000

Less liabilities                                                                                                         34,000

            Net Assets                                                                                                   248,000

Goodwill – Purchase Consideration

  • Net Assets

               =N280,000   –           N248,500

               = N31,500

JOURNAL

  Purchase of a biz Vendor N 280,000 N   280,000
Agreed purchase price Plant  & machine Furniture & fittings Stock Debtors Premises Goodwill Purchase consideration Creditors   76000 4000 36500 24000 142000 31500               280,000 34,000
Bank Bola Bassey Being cash introduced 20,000   10,000 10,000
Vendor Capital – Bola Bassey Being payment for purchase of biz 280,000 x   140,000 140,000

Balance sheet

Capital                         N                                                          N

Bola                              150,000                                            31,500

Bassey                        150,000                                            142,000

Current liabilities                                                                  4,000

Creditor                       34,000                                              76,000

Goodwill

Freehold

FxF

PxM

Current Asset

Stock    36500

Debtor  24000

Cash      20,000         80,000

                                       33,400         

                        334000

Presentation:

Step i. The teacher revision the previous lesson

Step ii. Introduces the new topic

Step iii. Gives a comprehensive example.

Step iv. General class discussion

Assignment:

Simplified and amplified page 4×4 ex 1

Assignment:

Simplified page 485 EX 2x and page 487 EX 6

CONCLUSION:

Teacher summarizes the lesson and gives student note

LESSON NOTE FOR THE THIRD WEEK ENDING 11-05-2020

CLASS                           –        SS2

DURATION                    –        40 M/P

NUMBER OF PERIOD     –        4

TOPIC – COMPANY’S AMALGAMATION

OBJECTIVES- The students are expected to:

  1. State the meaning of Amalgamation
  2. Differentiate between business purchase and amalgamation
  3. Prepare an amalgamation income.

PREVIOUS KNOWLEDGE – The students had been taught about  purchase of business previously.

REFERENCES MATERIAL – Simplified and Amplified Book Keeping and Accounting for SS1-3 by Femi Longe.

CONTENT:

Amalgamation is the combination of two or more firm into a new firm formal for that purpose.  The reasons for amalgamation range from desire to gain larger share of the market to desire to attain synergy.

ILLUSTRATION:

Kola and Bola have been friends and they both agreed to amalgamation their sole trading business and form a partnership with effect from 31st March. Their balance sheets are as follows:

Bola’s Balance sheet

                                                            N                                                                                 N

Capital                                              111,000        Land & Building                             60,000

                                                                                    Fixtures                                            15000

                                                                                    Stock                                                 2020000

Creditors                                          15000            debtors                                             27000

                                                                                    Bank                                                  6000

                                                            126,000                                                                    126,000

Kola’s Balance sheet

                                                            N                                                                                 N

Capital                                              129,000                    Fixtures                                90,000

                                                                                                Stock                                     24,000

                                                                                                Debtors                                21,000

                                                                                                Bank                                      3,000

                                                            138,000                                                                    138,000

Additional information:

  1. Kola is to be credited with goodwill of N21,000
  2. Bola’s land and building to be valued at N75,000 stock at N16,500
  3. Kola’s fixtures to be valued at N99,000, Debtors N19,200, Stock N21,600
  4. All other assets and liabilities are taken over as per the balance sheet. You are required to prepare the opening balance sheet of the new partnership.

SOLUTION:

Adjusted Kola’s Balance sheet

                                                  N Capital                                         154,800 Creditors                                        9,000                                                            163,800                                              N Goodwill                                         21,000 Fixtures                                          99,000 Debtors                                         19,200 Stock                                              21600 Bank                                               3000                                                         163,000                             

Adjusted Bola’s Balance sheet

                                                  N Capital                                         124,500 Creditors                                     15,000                                                            139,500                                                                           N Land & Building                           75,000 Fixtures                                         15,000 Stock                                              16,500 Debtors                                          27,000 Bank                                               6000                                                         139,500                             

Balance sheet of the partnership

                                                  N Capital   Kola                                   154,800                Bola                                124,500 Creditors                                        24,000                                                            303,300                                                                           N Goodwill                                         21,000 Land & Building                            75,000 Fixtures                                          114,000 Stock                                              38,100 Debtors                                          46,200 Bank                                                 9000                                                         303,300                           

Presentation:

Step 1:        The teacher revises the previous topic

Step 2:        Introduction to the new topic

Step 3:        Explanation of cogent points

Step 4:        Practical illustration

Assessment:

  1. Differentiate between business purchase and amalgamation
  2. What are the reasons for amalgamation?

Assignment:

Simplified and Amplified page 486 EX 4X and 6X.

Conclusion: The teacher summarizes the lesson and gives students note.

LESSON NOTE FOR THE FOURTH WEEK ENDING 20-05-2020

CLASS                  –        SS2

DURATION           –        40 M/P

NUMBER OF PERIOD –   4

TOPIC – COMPANY’S FORMATION

OBJECTIVES – The students are expected to:

  1. State the meaning of company
  2. List the type of companies
  3. Differentiate between
  4. Limited and unlimited company
  5. Private and public company
  6. Quoted and unquoted company

PREVIOUS KNOWLEDGE – The students are familiar with one man business i.e sole proprietorship  and partnership.

INSTRUCTIONAL MATERIALS – New paper and magazine

REFERENCE MATERIAL – Simplified and Amplified Book keeping and Accounting for senior secondary school by Femi Longe.

CONTENT:

A company formation is the term used for the process of incorporating a business in Nigeria. It is also known as the registration of a business. The duty for the registration of companies rest with the corporate affairs commission (C.A.C).

The advantages of forming a company include the following

  1. Provision of funds
  2. Independent of owners and management
  3. Continuity
  4. Free transfer of ownership
  5. Limited liability

Kinds of company

  1. Company  limited by shares
  2. Company limited by guarantee
  3. Unlimited company
  4. Quoted company
  5. Unquoted company

Documents involved in the formation of a company.

  1. Memorandum of Association
  2. Article of Association
  3. Certificate of incorporation
  4. Prospectus

Presentation:

Step 1:        The teacher revises the previous topic

Step 2:        Introduces the new topic

Step 3:        Explanation of salient points

Step 4:        General class discussion

Assessment

  1. What is a company?
  2. List and explain the various form of company

Assignment

  1. List and explain the various documents necessary for the formation of a company.

Conclusion

The teacher summarizes the lesson and gives the students note on the topic taught.

LESSON NOTE FOR THE FIFTH WEEK ENDING 25-05-2020

CLASS- SS2

DURATION – 40 MIP

NUMBER OF PERIOD -4

TOPIC – NIGERIAN FINANCIAL SYSTEM

OBJECTIVES:- The students should be able to:

  1. Explain the term financial system
  2. Identify the components of the financial system
  3. State the functions and features of each component

PREVIOUS KNOWLEDGE: the student has been taught about company

INSTRUCTIONAL MATERIALS: Essential financial accounting for SS1-3 by R.A Kazeem etal

CONTENT:

Financial market or system can be defined as an organized mechanic that allow the coming together of buyers and sellers to trade in and shares, bounds, and warrants using the stock exchange or directly between buyers and sellers.  

COMPONENT OF THE FINANCIAL SYSTEM

The financial system is composed of all person, group, bodies and association that are involved one way or the other in the operation of the system.

The component provide legal basic of operation, the market venue where sellers and buyers meet, the market products that are sold in the market, and the very support services which ensures that the market operates safely and satisfactorily.

The financial market is subdivided into two namely

  1. The money market
  2. The capital market

The money market is a market for short term mediations of funds.

            FUNCTIONS OF THE MONEY MARKET

  1. Provision of short-term capital to investor in both private and public holiday
  2. Mobilization of saving for investors
  3. Provision of investment, technical and managerial advise
  4. Provision of appropriates for the public to participate in the management of the economy

Capital market is the market where long term capital are produced. It is the market for the intermediation of long term capital or investment.

FUNCTIONS OF THE CAPITAL MARKET

  1. Provision of long term capital to investors
  2. Mobilization of saving for investment
  3. Encourage the growth of merchant banking
  4. Provision of investment advise

Presentation:

Step 1. The teacher revises the previous lesson

Step 2. Introduction to the new lesson

Step 3. Explanation of salient points

Step 4. General class discussion

Assessment:

  1.  Differentiate between the money market and the capital market
  2. Explain the following terms
  3.  Stock exchange
  4. Listed security
  5. Custodian

Assignment:

List and explain at least six terminology used in the capital market

LESSON NOTE FOR THE SIXTH WEEK ENDING 01-06-2020

CLASS- SS2

DURATION – 40 MIP

NUMBER OF PERIOD – 4

TOPIC – SHARES

OBJECTIVES – The student should be able to:

  1. State the meaning and types of shares
  2. Differentiate between classes of shares
  3. State the right and advantages of being a share holder

PREVIOUS KNOWLEDGE: The students had been taught about instrument used in the capital market

INSTRUCTIONAL MATERIALS: Charts

REFERENCE MATERIALS: simplified and amplified book-keeping & accounting by Femi Longe

Content: shares are units of ownership of a limited company. They are small units, each of equal amount into which the capital of a company is divided

TYPES OF SHARES

  1. Ordinary shares
  2. Preference shares

CLASSES OF PREFERENCE SHARES

  • Redeemable preference shares
  • Irredeemable preference shares
  • Cumulative preference shares
  • Non- cumulative preference shares
  • Deferred or founders shares

DIFFERENCES BETWEEN PREFERENCE SHARES AND ORDINARY SHARE HOLDERS

                  Preference                              Ordinary

1. 2. 3. 4. 5. Fixed rate of divided No voting right Shares are redeemable Received dividend first Not part of the owner of the company Rate of dividend is not fixed Has voting right Shares are not redeemable Received dividend last Real owners of the company 

Presentation:

Step 1. The teacher summarizes the last topic

Step 2. Introduces the new topic

Step 3. Explanation of cogent point

Step 4. General class discussion

ASSESSMENT:

  1. What is a share?
  2. List and explain the type of share
  3. List and explain the classes of preference share

Assignment:

  1. State the right and advantages of being a share holder
  2. Give detail feature of the ordinary share and preference share

Conclusion:

The teacher summarizes the lesson and gives students note.

LESSON NOTE FOR THE SEVENTH WEEK ENDING 08-06-2020

CLASS- SS2

DURATION – 40 MIP

NOS OF PERIOD – 4

TOPIC – ISSUES OF SHARES

SUB-TOPIC – ACCOUNT PREPARATION

OBJECTIVES: The student should be able to:

  1. Prepare all ledger entries for shares issued at per, premium and discount
  2. State the reasons why shares are issued at per, premium and discount

PREVIOUS KNOWLEDGE: The students have been introduced to share and types of shares capital previously.

REFERENCE MATERIALS: simplified and amplified book-keeping and accounting by Femi Longe

Content:

Example: ABC ltd offer for sales 100,000 ordinary shares were fully subscribe for and payment made as follows

Application             – 40k

Allotment                   – 30k

1st call                      – 20k

Final cell                     – 10k

You are required    

You are required to prepare the necessary ledger entry and the journal for the above transaction working (sol)

Application = 100,000 x 0.4 = 40,000

Allotment = 100,000 x = 30,000

1st cell = 100,000 x 0.2 = 20,000

 Final cell = 100,000 x 0.1 = 10,000

                                                     N100,000

Ledger

Appl. Account

S. Cap 40,000 Bank 40,000

Share Capital Account

  Bal.                              100,000 N Appl.                                  40,000 Allot.                                  30,000 1st cell                                20,000 Final cell                           10,000                                                                                 100,000

Allotment

S. cap.                               30,000 Bank 30,000

1st cell account

S. cap.                                20,000 Bank                                       20,000

Financial Account

S. cap.                                10,000                                       Bank 10,000

Bank Account

Appl.  40,000 Allot 30,000 1st c ell 20,000 Final cell 10,000                    100,000 Bal.   100,000 Bal.     ___________ 100,000

 Presentation:

Step 1. The teacher revises the last lesson

Step 2. Introduces the new topic

Step 3. Explanation of cogent point

Step 4. General class discussion

Assessment:

  1. Write a short note on the following
  2. Application
  3. Allotment
  4. Cells
  5. Share premium
  6. Over and under subscription

Assignment:

Simplified and amplified accounting page 444/445 Exc. 2 and 9x

Conclusion:

The teacher summarizes the lesson and gives student note.

LESSON NOTE FOR THE EIGHT WEEK ENDING 15-06-2020

CLASS                 –                  SS2

NO OF PERIOD     –                  4

DURATION           –                  40 M/P

TOPIC                  –                  LOAN CAPITAL

SUB-TOPIC          –                  DEBENTURES

OBJECTIVES       –                  The students should be able to:

  1. State  the meaning of debenture 
  2. List and explain the types of debenture
  3. State the effect of debenture  on organization.

PREVIOUS KNOWLEDGE: – The students have been taught about documents used in company’s formation and share capital.

INSTRUCTIONAL MATERIAL – Charts

REFERENCE MATERIAL – Financial Accounting made simple by Robert O. Igben

CONTENT:

Debenture is a written acknowledgment of a debt owed by a company executed under the common seal of the company.  Debenture is a loan obtained by a company from investors through the capital market only. Only a company has access to this kind of loan.  Some incorporated companies such as partnership and sole proprietorships do not.

TYPES OF DEBENTURE

  1. Secured Debenture secure debenture are those which carry a charge or mortgage on the assets of the company. This can either be:
  2. A friend charge – This is a mortgage on a specific assets.
  3. A floating charge:  This is a mortgage on all  or a class of the present and future assets of the company.
  4. Unsecured debenture (Simple or naked debenture).
  5. Redeemable debenture
  6. Irredeemable debenture (perpetual debenture)
  7. Convertible debenture

Presentation:

Step 1. The teacher summarizes the previous topic

Step 2. Introduces to the new topic

Step 3. Detail complication on the new topic

Step 4. General class discussion

Assessment:

  1. Define the following
  2. Loan
  3. Debenture
  4. State and explain the various type of debenture    

Assignment:

What are the conductions to be fulfilled before a loan is grated either to a company or individual

Conclusion: the teacher summarizes the lesson and gives the student note

LESSON NOTE FOR THE NINTH WEEK ENDING 22-06-2020

CLASS                                     –        SS2

DURATION                              –        40 M/P

NUMBER OF PERIOD               –        4

TOPIC                                     –        CAPITAL MARKET

OBJECTIVES                           –        The students should be able to:

  1. State the meaning of capital market
  2. List and explain the operators in the capital market
  3. State the advantages of the capital market.

PREVIOUS KNOWLEDGE:- The student had been taught about the  Nigeria financial system.

INSTRUCTIONAL MATERIAL – Chart

REFERENCE MATERIAL – Simplified and Amplified financial Accounting for SS1-3 by Femi Longe.

Content:

Capital market is the market for buying and selling of long term debt or equity  backed security. It is made up of institutions, structures where by intermediation of medium and long term funds take place.

Capital market is for investing funds in debenture, stock and shares. The capital market can be sub-divided into two:

  1. Primary market
  2. Secondary market

Primary market is the market where new shares or bonds are sold to the investors

FEATURES OF PRIMARY MARKET

  1. Market for new long term securities
  2. Primary issues or setting up a new business for expansion
  3. The organization receives money and issues certificate
  4. The method of capital are public issue offered for sales, offered for subscriptions
  5. It has no particular place of operation.

SECONDARY MARKET:- This is a market where existing shares are traded among investors. It is controlled by the Nigeria stock exchange market.

Features

  1. It deals with sales and purchases of existing shares.
  2. It has a particular place  of trading called stock exchange market
  3. It creates liquidity and securities because it can be easily converted to cash.

Operators of the capital market

  1. Individual investors
  2. Traders
  3. Pension fund
  4. Insurance companies
  5. Pension fund administration
  6. Mortgage institution

Advantages of capital market

  1. It serves as an avenue to invest fund by the investors
  2. It creates wealth for individuals  corporate body and government
  3. It offers bonus shares to existing share holders
  4. It can be use as a collateral security to obtain loan from the bank
  5. It serves as an exchange avenue for economic growth and development
  6. It creates employment opportunities
  7. It improves the standard of living of operators and that of the general public’s since it create wealth.
  8. It attracts foreign capital and investors in the country’s economy.

Advantages to companies

  1. It enables company to raise capital
  2. It ensures the popularity of the company
  3. It ensures the perpetuity  of a limited company
  4. It is a base of measuring the company performance.

Regulation of the capital market

Regulation is the process of controlling the activities of the participants in the market to ensure accountability, transparency, farmers and efficiency.

Types of Regulation

  1. Statutory Regulation
  2. Self regulation
  3. Supervisory regulation

Reason for Regulation

  1. The ensure economic growth
  2.  For the stability of the financial system
  3. To instill confidence in the market
  4. The prevent sharp practices.

Presentation:

Step 1:          Teacher revises the previous  topics

Step 2:        Introduction to the new topic

Step 3:        Explanation of salient points

Step 4:        General class discussion.

Assessment:

  1. List at least  five features of both the primary and the secondary market.

Assignment

Write out and explain the various operators of the cogent market.

Conclusion:  The teacher summarizes the lesson and gives the students note.

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