Rabi Ltd. purchased building from Tiwari Ltd. for Rs. 6,40,000 out of which Rs. 40,000 is paid immediately and the balance is to be paid by the issue of shares of Rs. 100 each at a premium of 20%. How many shares will be issued?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 5,000 Shares
When shares are issued to a vendor, the number of shares is the amount payable in shares divided by the issue price of one share. Only the balance left after the cash payment is paid in shares, and at a premium the issue price is the face value plus the premium.
Purchase price = Rs. 6,40,000
Paid in cash = Rs. 40,000
Amount payable in shares = Rs. 6,40,000 − Rs. 40,000 = Rs. 6,00,000
Issue price = Rs. 100 + 20% of Rs. 100 = Rs. 120
Number of shares = Rs. 6,00,000 ÷ Rs. 120 = 5,000 shares
Options (1) and (2) are the answers of the book’s own example (building bought for Rs. 5,40,000): Rs. 5,40,000 ÷ Rs. 100 = 5,400 shares at par, and Rs. 5,40,000 ÷ Rs. 120 = 4,500 shares at a 20% premium. A student who works with the book’s figures instead of the question’s picks a wrong option. Here only the balance of Rs. 6,00,000 is paid in shares, and at Rs. 120 a share that is 5,000 shares.
Note: NTA picked this question from an NCERT (2026-27) illustration and changed the figures. Do not ignore NCERT while practising numericals.
NCERT (2026-27 edition):
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