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 at the time of allotment of shares.

₹6,10,000

The correct answer is Option (2) → ₹6,10,000

Shares issued = 80,000
Applications received = 2,50,000
Rejected applications = 30,000

Money refunded on rejected shares = 30,000 x 5
                                                            = 1,50,000

Remaining applications = 2,50,000 - 30,000
                                     = 2,20,000

On 2,20,000 pro-rata is made and 80,000 shares are allotted.

Application money received on 2,20,000 applications = 2,20,000 x 5
                                                                                   = ₹11,00,000
Excess money received on (2,20,000-80,000) shares i.e. 1,40,000
Excess money = 1,40,000 x 5
                       = ₹7,00,000

Allotment money due = 80,000 x 3
                                  = ₹2,40,000

Money refunded on after adjusting application money on allotment = 7,00,000 - 2,40,000
                                                                                                              = 4,60,000

Total money refunded on allotment = 4,60,000 + 1,50,000
                                                           = ₹6,10,000