Page 249 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Accounting for Companies-I

Notes (iii) When the underwriting commission is due–
Issuing Company Account Dr.
To Underwriting Commission Account.
(iv) When the amount due on shares or debentures is paid to the issuing company–
Issuing company Dr.
To Bank Account.
(v) When the underwriting commission is received in cash or shares–

Bank Account Dr.
Shares or Debentures A/c Dr.
To Issuing Company Account.
(vi) When shares or debentures are given to sub-underwriter on the basis of the sub-
underwriting agreement-
Sub-Underwriter Account. Dr.
To underwriting (Shares or Debentures in X Co.)
(vii) When the sub-underwriting commission is due to the sub underwriter-
Underwriting Commission Account Dr.
To Sub-underwriters Account.

(viii) When the amount due on shares or debentures given to the sub-underwriter is received-
Bank Account Dr.
To Sub-underwriters Account.
(ix) When the sub-underwriting commission is paid to the sub-underwriter in cash or shares-
Sub-underwriters Account Dr.
To Bank Account.

To underwriting (shares or Debentures of X Co.).
(x) When the shares or debentures are sold in the market-
Bank Account. Dr.
To Underwriting Shares or Debentures in X Co.)
(xi) When the balance of underwriting commission account is transferred to underwriting
(shares or debentures in X Co.) A/c-
Underwriting Commission Account Dr.
To Underwriting (shares or debentures in X Co.) A/c
(xii) Closing the shares or debentures in stock will be valued at cost or market price, whichever
is less, and profit or loss on these share due to price fluctuation will be transferred to Profit
and Loss Account.
In case of profit
Underwriting (Shares or Debentures in X Co.) A/c Dr.
To Profit and Loss Account.

In case of loss this entry will be reversed.

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