Journal entries relating to chapter underwriting of shares

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Querist : Anonymous

Querist : Anonymous (Querist)

04 February 2012 Pls tell me the Journal entries(with narration) relating to chapter underwriting of shares

Thanks in advance..

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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04 February 2012 Accounting Treatment of Underwriting in the Books of Company

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. XXXX
Share capital Account Cr. XXXX

2. When underwriter takes the liability of unsold shares

Underwriter's account Dr. XXXX
Share Capital Account Cr. XXXX

3. When underwriting commission will due

Underwriting Commission Account Dr. XXXX
Underwriter's Account Cr. XXXX

4. When Underwriter deduct his commission and send net amount of takeover shares

Bank Account Dr. XXXX
Underwriter Account ( Total receivable amount on takeover shares by underwriter - Underwriter's commission) Cr. XXXX

Querist : Anonymous

Querist : Anonymous (Querist)

04 February 2012 Thank You Sir

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