A company issued 40,000 preference shares of ₹100 per share at par payable as under:
On Application: 20%
On Allotment: 40%
On First & Final Call: Balance
Applications were received for 50000 shares. The allotment was made on a pro-rata basis. How much amount will be received in cash on the allotment?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- ₹14,00,000.
Shares issued = 40,000
Application received = 50,000
Excess application = 50,000 - 40,000
= 10,000 shares
Money on these 10,000 shares will be adjusted against allotment.
So, money adjusted on allotment = 10,000 x (100 x 20/100)
= 2,00,000
Allotment money per share = 100 x 40/100
= 40
Amount due on allotment = 40,000 X 40
= ₹16,00,000
Amount received on allotment = Amount due on allotment - Excess money adjusted
= 16,00,000 - 2,00,000
= ₹14,00,000
Thus amount received on allotment is ₹14,00,000.