Page 242 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Underwriters Total
Particulars Ajay Vijay Sanjay
shares share share
Gross Liability 18,000 7,500 4,500 30,000
Less: Marked Applications given Resultant Liability 3,000 6,000 1,500 10,500
Unit 10: Underwriting of Shares
Less: Unmarked Application in gross 15,000 1500 3000 19500
Liability Ratio (12:5:3) 6,480 2,700 1,620 10,800
8,520 –1,200 1,380 8,700
Notes
Less: Surplus of Vijay distributed between Ajay and
Sanjay in the gross liability ratio (12:3) –960 –1200 240 —
+
Net Liability 7,560 Nil 1,140 8,700
Add: Firm underwriting 2,550 900 2,850 6,300
Total Liability 10,110 900 3,990 15,000

Working Note:

1. Total applications received by the company 21,300
Less: Marked applications received
Ajay – 3,000
Vijay – 6,000
Sanjay – 1,500 10,500

Unmarked applications (including firm applications) 10,800
2. Gross Liability Ratio:
Ajay Vijay Sanjay

18,000 : 7,500 : 4500
180 : 75 : 45
12 : 5 : 3
Illustration 9
Sardar Limited issued to the public 1, 50,000 equity shares of 100 each at par. 60 per share was
payable along with the application and the balance on allotment. The issue was underwritten
equally by Ali, Bali and Charlie for a commission of 5%. Applications for 1, 40,000 shares were
received as per details below:
Underwriters Firm Marked Total
Applications Applications
Ali 5,000 40,000 45,000
Bali 5,000 46,000 51,000

Charlie 3,000 34,000 37,000
Unmarked Applications 7,000
Total 140,000
It was agreed to credit unmarked applications equally to Ali & Charlie. Sardar Limited
accordingly made the allotment and received the amounts due from public. The underwriters
settled their accounts.
You are requited to:
(i) Prepare a statement showing the liability of underwriters

(ii) Journalize the above transactions (including cash) in the books to Sardar Limited.

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