Read the following information and answer the question.
ABC Ltd offered 20,000, 12% debentures of ₹100 each at a premium of 10% payable as ₹40 on application (including premium) and balance on allotment redeemable after 8 years. 30,000 applications are received by the company and the allotment is made on pro-rata basis. All the money on application and allotment is received by the company timely.
How much money is received on allotment?
Answer & explanation
Correct answer: option 1
The correct answer is option 1- ₹10,00,000.
Face value of debenture = ₹100
Application money = ₹40 including premium of 10%.
Premium is = 100 x 10/100
= ₹10
Allotment money = 100 -30
= ₹70
Money due on allotment = 20,000 deb x 70
= ₹14,00,000
Application received = 30,000
Application money = ₹40 including premium
Total application money = 30,000 x 40
= ₹12,00,000
Total application money required = 20,000 debentures x 40
= ₹8,00,000
Excess money adjusted against allotment = 12,00,000 - 8,00,000
= ₹4,00,000
Amount received on allotment = 14,00,000 - 4,00,000
= ₹10,00,000