Page 259 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Accounting for Companies-I

Notes 3. Ranu Limited issued 75,000 equity shares of 10 each at a premium of 10 per share and
3,000 debentures of 100 each at 95. 80% of the issue is underwritten by Shalini Singh and
Co. at a maximum rate of commission allowed by law. Applications were received for
60,000 equity shares and 2,250 debentures, which were accepted and the payment for these
was received in full. Journalize the above transactions and show the entries in the balance
sheet, assuming that the amounts due from the underwriter have been received.
Ans: Total of Balance Sheet 10,77,000.

4. Kusum Ltd. has an authorized capital of 25,00,000 divided into 1,00,000 equity shares of
25 each. The company issued for subscription, 25,000 shares at a premium of 10 each.
The entire issue was underwritten as follows:
A – 15,000 shares (Firm underwriting – 2,500 shares)
B – 7,500 shares (Firm underwriting – 1,000 shares)
C – 2,500 shares (Firm underwriting – 500 shares)

Out of the total issue 22,500 shares including firm underwriting were subscribed.
The following were the marked forms:
A – 8,000 shares
B – 5,000 shares

C – 2,000 shares.
Calculate the liability of each underwriter, assuming that marked forms include firm
underwriting also.

Ans: A-4,833; B-1,176; C-500 shares.
5. J. Ltd. issued 20,000 shares which were underwritten as follows:
A-12,000 Shares, B-5,000 Shares, and C-3,000 Shares. The underwriters made applications
for firm underwriting as under:
A-1,600 Shares, B-600 Shares, and C-2,000 Shares.
The total subscriptions excluding firm underwriting but including marked applications
were for 10,000 shares.
The marked applications were as under:
A-2,000 Shares, B-4,000 Shares, and C-1,000 Shares.
You are required to show the allocation of the liability of underwriters.

Ans: Liability of underwriters in shares A-7,400, B-600 and C-2,000.
6. Shilpa Limited issued 1,20,000 Equity Shares of 10 each. The whole issue was underwritten
by Yogita & Company at an agreed commission of 5% payable as to 75% in fully paid
shares and 25% in cash. In addition to underwriting of these shares, Yogita & Co. also
made a firm application for 30,000 equity shares. 75% of the issue was subscribed by the
public and Yogita & Co. was obliged to take 25% of the shares underwritten. The shares of
Shilpa Ltd., were subsequently quoted at a discount of %. Prepare the necessary accounts
in the books of Yogita & Co.
Ans: Loss 20,625.

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