Question

Lemon Tree Ltd. issued 40,000 Equity Shares of ₹ 10 each at par payable ₹ 3 on Application; ₹ 4 on Allotment and Balance on First and Final Call. Applications were received for 1,10,000 shares. Applications for 20,000 shares were refused allotment and pro rata allotment was made to the remaining applicants. Amount received and refunded on allotment is

Options

• ₹ 1,00,000 and Nil.

• ₹ 10,000 and ₹ 60,000.

• Nil and ₹ 1,00,000.

• Nil and ₹ 10,000.

Answer 1

₹ 10,000 and ₹ 60,000.

Explanation:

Applications for 20,000 shares were rejected, so refund:

20,000 × ₹ 3 = ₹ 60,000

For the remaining 90,000 shares, excess application money adjusted towards allotment:

(90,000 × ₹ 3) − (40,000 × ₹ 3) = ₹ 1,50,000

Allotment due:

40,000 × ₹ 4 = ₹ 1,60,000

Amount received on allotment:

₹ 1,60,000 − ₹ 1,50,000 = ₹ 10,000

Therefore, ₹ 10,000 was received and ₹ 60,000 was refunded.