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Homework answers / question archive / Heroes and Villains Corporation is authorized to issue 50,000 ordinary shares at Php 75 per share
Heroes and Villains Corporation is authorized to issue 50,000 ordinary shares at Php 75 per share. On April 8, the corporation received subscriptions from Sandra Diaz-Twine for 800 shares at Php 95 per share. Sandra paid 60% of the total subscription but was unable to pay the balance. The unpaid portion was declared delinquent and was placed in a public auction. For this, the Corporation incurred a total of Php 12,500 for advertising the sale of the delinquent sale. Subsequently, the Corporation received bids from the following bidders: Rob Mariano - 600 shares, Parvati Shallow - 540, Ethan Zohn - 500, and Danni Boatwright - 680 shares. However, Ethan Zohn is not willing to pay for the expenses incurred by the Corporation for the sale of delinquent shares. Required: (1) How much should the highest bidder pay? = (2) How many shares will Sandra receive?
1) The highest bidder should pay Php 42900
2) Number of Share Receive by Sandra =260 shares .
Explanation
1)The sale of the delinquent stocks will include all the expenses incurred relating to the sale of the delinquent shares will be debited to Receivable from Highest Bidder account since this amount will be collected from the highest bidder together with the unpaid balance ofthe subscription
2) The sale of the delinquent subscription is issued to the highest bidder.
3) The highest bidderis the one who is willing to pay the unpaid balance of the subscription and all the expenses and any interest accrued on delinquent stock .
(1)In given case as Ethan bid for the lowest number of share but not ready to pay for the expenses will not be consider as highest bidder, hence Parvati shallow will be the highest bidder with the lower number of share as bid.
Calculation of unpaid balance =800×95×40%=30400
Adding Expenses on Advertisement =12500
Hence the Highest bidder must pay=30400+12500 =42900 in total and 79.44 per share.
2) After the subscription get fully paid the stock is first issue to the highest bidder upto the number of share they bid and the remaining share were get allotted to the defaulter
Total subscription for share receive by the defaulter was 800 - Alloted to the highest bidder 540
Remaining Share will get alloted to the defaulter ie Sandra =260 shares .
