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Jan. 31

To Equity Share Capital Account.

(Being receipt of application money on
9,60,000 shares @ 2.50 per share)
March 31
Equity Share Allotment Account
24,00,000
Dr.

To Equity Shares Capital Account
24,00,000

(Being application money transferred to

2005 Date Bank Account Particulars Dr. L.F. 24,00,000 24,00,000
share Capital Account)
March 31 Equity Share Allotment Account Dr. 28,80,000
To Equity Share Capital Account 24,00,000
To Share Premium Account 4,80,000 Unit 10: Underwriting of Shares
(Being allotment money due on 9,60,000
shares @ 3 per share including
premium)
March 31 Bank Account Dr. 28,74,000 Notes
To Equity Share Allotment Account 28,74,000
(Being receipt allotment money on
9,60,000 shares expect 2000 shares)
March 31 Shetty Dr. 2,20,000
To Equity Shares Capital Account 2,00,000
To Shares Premium Account 20,000
(Being allotment of 40,000 shares to
Shetty as per underwriting agreement)
March 31 Bank Account Dr. 2,20,000
To Shetty 2,20,000
(Being receipt of the money on 40,000
shares)
March 31 Underwriting Commission Account Dr. 5,25,000
To Seth 2,62,500
To Setty 2,62,500
(Being commission due @ 5% in the
issue price 10.50 of 10,00,000 shares
distributed equally)
March 31 Seth Dr. 2,62,500
Shetty Dr. 2,62,500
To Bank Account 5,25,000
(Being payment of underwriting
commission)
June 30 Share Capital Account Dr. 10,000
Share Premium Account Dr. 1,000
To Share Allotment Account 6,000
To Share Forfeited Account 5,000
(Being forfeiture of 2,000 shares for non
payment of allotment money)
June 30 Bank Account Dr. 8,000
Shares Forfeited Account Dr. 2,000
To Equity Share Capital Account. 10,000
(Being forfeited shares reissued @ 4
per share)
June 30 Shares Forfeited Account Dr. 3,000
To Capital Reserve Account 3,000
(Being transfer of profit on sale of
reissue of forfeited shares)

10.8 Accounts of Underwriter

To determine the profit or loss on the underwriting business, the underwriters can maintain two
types of accounts:
Type I – When only one account is maintained by the underwriter i.e., Underwriting Account.
Type II – When more than one account is maintained by the underwriter.

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