Avtar Ltd. invited application for 80,000 shares of ₹10 each payable ₹5/-on Application, ₹ 3/- on allotment and ₹ 2/- on call. Public had applied for 2,50,000 shares out of which application for 30,000 shares were rejected and remaining were allotted on pro-rata basis. Excess application money was adjusted against allotment only. Determine the amount to be refunded to the applicants who were allotted shares on pro-rata basis.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → ₹4,60,000
Applications accepted for pro-rata allotment = 2,50,000 − 30,000 = 2,20,000 shares, for 80,000 shares allotted.
Application money received from them = 2,20,000 × ₹5 = ₹11,00,000
Application money due on 80,000 shares = 80,000 × ₹5 = ₹4,00,000, so the excess = ₹7,00,000
Excess adjusted against allotment (only up to the allotment due) = 80,000 × ₹3 = ₹2,40,000
Refund to the pro-rata applicants = ₹7,00,000 − ₹2,40,000 = ₹4,60,000
The money on the 30,000 rejected applications (30,000 × ₹5 = ₹1,50,000) is returned in full to those applicants; with it the total cash refunded would be ₹6,10,000.