Menu
Underwriting help
Replies (2)
Issue Value = 25,000*10 = 2,50,000
Commission = 2,50,000*10/100 = 25,000
75 % in terms of shares = 25,000 * 75/100 = 18,750 , Cash Payment = 25,000 - 18,750 = 6,250
However the maximum commission payable is 5 % i.e 25,000*5/100 = 1,250
Therefore commission in terms of shares = 1,250 * 75/100 = 937.50 , Cash Payment = 312.50
Total subscripttion by the underwriter = 25,000*40/100 + 3,000 = 10,000 + 3,000 = 13,000 shares
In the books of company, you will pass following journal entries.
1. When company gets money from public for selling shares under the contract of underwriting.
Bank account Dr.
Share capital Account Cr.
2. When underwriter takes the liability of unsold shares
Underwriter's account Dr.
Share Capital Account Cr.
3. When underwriting commission will due
Underwriting Commission Account Dr.
Underwriter's Account Cr.
4. When Underwriter deduct his commission and send net amount of takeover shares
Bank Account Dr.
Underwriter Account ( Total receivable amount on takeover shares by underwriter - Underwriter's commission) Cr.
1. When company gets money from public for selling shares under the contract of underwriting.
Bank account Dr.
Share capital Account Cr.
2. When underwriter takes the liability of unsold shares
Underwriter's account Dr.
Share Capital Account Cr.
3. When underwriting commission will due
Underwriting Commission Account Dr.
Underwriter's Account Cr.
4. When Underwriter deduct his commission and send net amount of takeover shares
Bank Account Dr.
Underwriter Account ( Total receivable amount on takeover shares by underwriter - Underwriter's commission) Cr.
Ok . . .
sir where is underwriting defined under law ?? any act any notification ???
Recent Threads
- Pvt Ltd company director salary tds rate and sec.
- What are the best tools for mobile accessibility t
- APPLIED NEW TAN NO BUT SUB CATEGORY GOES WORNG AS
- In gst Returns dashboard not properly working
- Data disappeared from e-Campaign
- How do you collect documents from clients every mo
- GST PORTAL NOT WORKING P6
- Looking for secure offline tax computation tools
- GST Refund on Capital goods on itc Reducing 5% per
- Querries related to ptec
Related Threads
CAclubindia
