Page 243 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Accounting for Companies-I

Notes Solution:
Sardar Limited
A. When the benefit of firm applications is given to individual underwriters, or when firm
applications are treated as marked application.

Statement Showing the Liability of Underwriters in Shares
Underwriters
Particulars Total
Ali Bali Charlie
Gross Liability 50,000 50,000 50,000 1,50,000
Less: Marked Applications 40,000 46,000 34,000 1,20,000
Less: Relief for Unmarked Applications 10,000 4000 16,000 30,000
3,500 – 3,500 7,000
6,500 4000 12,500 23,000
Less: Firm Application 5,000 5,000 3,000 13,000
1,500 –1,000 9,500 10,000
Less: Surplus of Bali distributed to Ali and
Charlie in gross
Liability ratio 500 1000 500 –
Net Liability 1,000 Nil 9,000 10,000
Add: Firm underwriting 5,000 5,000 3,000 13,000
Total Liability 6,000 5,000 12,000 23,000

Calculation of Net amount Receivable from Underwriters
Ali Bali Charlie Total
Total liability in shares (as calculated) 6,000 5,000 12,000 23,000
Amount due @ 60 per share 3,60,000 3,00,000 7,20,000 13,80,000
Less: Commission @ 5% on the nominal value 2,50,000 2,50,000 2,50,000 7,50,000
of shares
Final amount receivable 1,10,000 50,000 4,70,000 6,30,000

B. When the benefit of firm underwriting is not given to individual underwriters, or when

firm applications are treated as unmarked applications.
Statement Showing the Liability of Underwriters in Shares

Particulars Ali Bali Charlie Total
Gross Liability 50,000 50,000 50,000 1,50,000
Less: Marked Applications 40,000 46,000 34,000 1,20,000
Less: Unmarked Applications 10,000 4000 16,000 30,000
(Including firm applications) 10,000 — 10,000 20,000
Net Liability Nil 4,000 6,000 10,000
Add: Firm Underwriting 5,000 5,000 3,000 13,000
Total liability in shares 5000 9000 9000 23000

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