XYZ Ltd. issued 1,50,000 equity shares of ₹10 each to public. The issue was underwritten by A, B, C and D as under: A 30%, B 25%, C 25% and D 20% The issue was firm-underwritten by the underwriters as under : A : 6,000 s

CS Executive · Company Accounts & Auditing Practices · PYQS · December 2020
XYZ Ltd. issued 1,50,000 equity shares of ₹10 each to public. The issue was underwritten by A, B, C and D as under: A 30%, B 25%, C 25% and D 20% The issue was firm-underwritten by the underwriters as under : A : 6,000 shares, B : 8,000 shares, C : Nil, D : 16,000 shares Public subscription excluding firm-underwriting but including marked applications were 1,10,000 shares. The marked applications were as under : A 30,000 shares B 23,000 shares C 17,000 shares D 25,000 shares Ascertain the liability of each underwriter (No. of shares), assuming firm-underwriting shares be treated as un-marked applications.

Answer & Explanation:

Statement showing the liability of Underwriters assuming firm-underwriting shares be treated as un-marked applications Particulars A B C D TOTAL In Percentage (%) 30 25 25 20 100 Gross Liability 45000 37500 37500 30000 150000 Less: Marked Application 30000 23000 17000 25000 95000 15000 14500 20500 5000 55000 Less: Unmarked Application 13500 11250 11250 9000 45000 Balance Liability 1500 3250 9250 (4000) 10000 Less: Excess shares of D allocated to A, B, & C (in the ratio of 6:5:5) (1500) (1250) (1250) 4000 Nil Net liability Nil 2000 8000 Nil 10000 Add: Firm Underwriting 6000 8000 Nil 16000 30000 Total Liability 6000 10000 8000 16000 40000 Working Note Unmarked Application = 110000 - 95000 + 30000 = 45000 shares

Topics: Company Accounts

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