A company made a public issue of 1,25,000 equity shares of ₹100 each as on 15th March, 2026, ₹50 payable on application. The entire issue was underwritten by A, B, C, and D in the proportion of 30%, 25%, 25% and 20% resp

CS Executive · Corporate Accounting and Financial Management · PYQS · June 2026
A company made a public issue of 1,25,000 equity shares of ₹100 each as on 15th March, 2026, ₹50 payable on application. The entire issue was underwritten by A, B, C, and D in the proportion of 30%, 25%, 25% and 20% respectively. Under the terms agreed upon a maximum limit of underwriting commission was payable to underwriters. A, B, C and D also agreed on firm underwriting of 4000, 6000, Nil, 15,000 shares respectively. The total subscription excluding firm underwriting but including marked application received were 90,000. Marked applications were received from A-24,000, B-20,000, C-12,000 and D-24,000. Consider firm underwriting shares are treated as unmarked application. Prepare a statement showing net underwriter liability.

Answer & Explanation:

Answer 3(c) Statement showing Underwriter's Liability Particulars A B C D Gross Liability 37,500 31,250 31,250 25,000 Less: Unmarked application 10,500 8,750 8,750 7,000 Total 27,000 22,500 22,500 18,000 Less: Marked application 24,000 20,000 12,000 24,000 Total 3,000 2,500 10,500 (-)6,000 Less: surplus of D allocated to A,B,C in the ratio of 6:5:5 (-) 2,250 (-) 1875 (-) 1875 (+)6,000 Total 750 625 8625 --- Add: Firm underwriting 4,000 6,000 15,000 Net liability 4,750 6,625 8,625 15,000 Working Note: Unmarked application = (90,000 - 80,000) + 25,000 = 35000 (Firm underwriting treated as unmarked)

Topics: Corporate Accounting

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