A company issued 1,50,000 shares of 10 each at a premium of 10. This was underwritten- as follows: X - 90000 shares (Firm underwriting 12000 shares) - 37500 shares (Firm underwriting 4500 shares) z - 22500 shares (Firm underwriting 15000 shares) | Y - Total subscriptions received by the company (excluding firm underwriting and marked applications) were 22500 shares. The marked applications (excluding firm underwriting) were as follows: X – 15000 shares; Y - 30000 shares and Z-7500 shares Commission payable to underwriters is at 5% of the issue price. The underwriting contract provides that credit for unmarked applications be given to the underwriters in proportion to the shares underwritten and benefit of firm underwriting is to be given to individual underwriters. (1) Determine the liability of each underwriter (number of shares) (ii) Compute the amounts payable or due from underwriters; and (iii) Pass Journal Entries in the books of the company relating to underwriters.
A company issued 1,50,000 shares of 10 each at a premium of 10. This was underwritten- as follows: X - 90000 shares (Firm underwriting 12000 shares) - 37500 shares (Firm underwriting 4500 shares) z - 22500 shares (Firm underwriting 15000 shares) | Y - Total subscriptions received by the company (excluding firm underwriting and marked applications) were 22500 shares. The marked applications (excluding firm underwriting) were as follows: X – 15000 shares; Y - 30000 shares and Z-7500 shares Commission payable to underwriters is at 5% of the issue price. The underwriting contract provides that credit for unmarked applications be given to the underwriters in proportion to the shares underwritten and benefit of firm underwriting is to be given to individual underwriters. (1) Determine the liability of each underwriter (number of shares) (ii) Compute the amounts payable or due from underwriters; and (iii) Pass Journal Entries in the books of the company relating to underwriters.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:A company issued 1,50,000 shares of 10 each at a premium of 10. This was underwritten- as follows:
X – 90000 shares (Firm underwriting 12000 shares)
|
Y - 37500 shares (Firm underwriting 4500 shares)
z - 22500 shares (Firm underwriting 15000 shares)
Total subscriptions received by the company (excluding firm underwriting and marked applications) were
22500 shares.
The marked applications (excluding firm underwriting) were as follows:
X – 15000 shares; Y
Commission payable to underwriters is at 5% of the issue price. The underwriting contract provides that
credit for unmarked applications be given to the underwriters in proportion to the shares underwritten and
benefit of firm underwriting is to be given to individual underwriters.
- 30000 shares and Z- 7500 shares
(1) Determine the liability of each underwriter (number of shares)
(ii) Compute the amounts payable or due from underwriters; and
(iii) Pass Journal Entries in the books of the company relating to underwriters.
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