PK Ltd. issued 30,000, 12% Debentures of ₹100 each at 10% premium. Full amount was payable on Application. Public had applied for 40,000 Debentures, pro-rata allotment was made to applicants of 36,000 debentures. Determine the amount to be refunded at the time of allotment of Debentures.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rs. 11,00,000
Issue price per debenture = ₹100 + 10% premium = ₹110, all payable on application.
Rejected applications = 40,000 − 36,000 = 4,000 debentures
Refund on rejected applications = 4,000 × ₹110 = ₹4,40,000
Pro-rata applicants applied for 36,000 but get 30,000, so 6,000 are excess.
The full amount was paid on application, so there is no later instalment to adjust it against; it is refunded = 6,000 × ₹110 = ₹6,60,000
Total refund = ₹4,40,000 + ₹6,60,000 = Rs. 11,00,000