Pina Ltd. issued to public 2,00,00,000 equity shares of ₹10 each at 25% premium which was payable ₹6 per share on application and the balance on allotment. The issue was underwritten by Poova Underwriters Ltd. for a maxi

CS Executive · Company Accounts & Auditing Practices · PYQS · December 2018
Pina Ltd. issued to public 2,00,00,000 equity shares of ₹10 each at 25% premium which was payable ₹6 per share on application and the balance on allotment. The issue was underwritten by Poova Underwriters Ltd. for a maximum commission as per section 40(6) read with rule 13 of the Companies Act, 2013. The public subscribed for 1,45,00,000 equity shares and the rest had to be taken up by the Poova Underwriters Ltd. At the end of the year these shares were quoted in the share market at ₹10.15 per share. You are required to prepare the necessary ledger accounts in the books of underwriter.

Answer & Explanation:

Ledgers of Poova Underwriters Ltd. Pina Ltd. A/c (in '000') Particulars J.F. ₹ Particulars J.F. ₹ To Underwriting Commission A/c 12,500 By Equity Shares in Pina Ltd. A/c (55,00,000 * ₹12.50) 68,750 To Bank A/c 56,250 68,750 68,750 Equity Shares in Pina Ltd. A/c (in '000') Particulars J.F. ₹ Particulars J.F. ₹ To Pina Limited A/c 68,750 By Underwriting Commission A/c 12,500 By P&L A/c 425 By Bal. c/d 55,825 68,750 68,750 Underwriting Commission A/c (in '000') Particulars J.F. ₹ Particulars J.F. ₹ To Equity Shares in Pina Limited A/c 12,500 By Pina Ltd A/c 12,500 12,500 12,500 Working Notes: (in '000') Underwriting Commission = 5% on (2000000 * ₹12.50) = ₹12,500 Loss on Quota Price = Cost of Shares in Pina Ltd. - Quoted Price = (68750 - 12500) - (5500 * 10.15) = 56250 - 55825 = 425

Topics: Company Accounts

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