Underwriting of Shares: Questions and Answers

Underwriting of Shares Question 1: Partial Underwriting A company issued 100,000 shares valued at $100 per share. The shares were underwritten as follows: X: 30,000 shares Y: 50,000 shares The public applied for 70,000 shares. Required: Determine the liability of X, Y, and the company. Answer Marked applications are not given in the problem. Therefore, … Read more

Issue and Redemption of Debentures: Practical Problems and Solutions

Issue of Debentures Journal Entries Practical Problem 1 A company issued 1,000 10% debentures of $100 each at par, with $40 payable on application and the balance on allotment. The public applied for 800 debentures and the applications were accepted. All money was received. Required: Show the journal entries. Solution Issue of Debentures for Non-cash … Read more

Redemption of Preference Shares: Practical Problems and Solutions

Problem 1: Redemption of Preference Shares at Premium On 1 July 2000, a limited company issued 10,000 redeemable preference shares valued at $10 per share. The shares were redeemable at a premium of 10%. Two-fifths of the company’s issue was redeemed out of profits on 10 January 2004. On 20 January 2004, the company issued … Read more

Issue of Shares at Premium and Discount – Practical Problems With Answers

Problem No. 1 Asian Ltd. issued 5,000 Preference Share of $10 each at a premium of $4 per share, payable $1 per share on application; $6 per share on allotment including premium; 3 per share on first call and $4 per share on final call. The shares were all subscribed and money was duly received. … Read more

Corporation

What Is a Corporation? – Definition A corporation is a separate body, authorized by law, owned by one or more persons and having its own rights, privileges, and obligations distinct from those of its owner(s). In effect, under the Constitution, a corporation is a separate legal entity with a continuous life that has rights and … Read more