Question

Santiago Ltd. invited applications for issuing 2,00,000 shares of ₹10 each payable ₹3 per share on application, ₹5 per share on allotment and ₹2 per share on first and final call. The issue was oversubscribed and the company received ₹9,60,000 as application money. The company rejected some applications and pro rata allotment was made to the remaining applicants in the ratio of 5 : 4. Applications for how many shares were rejected?

Options

• 50,000

• 1,30,000

• 70,000

• 1,20,000

Answer 1

70,000

Explanation:

Total applied = ₹9,60,000 ÷ ₹3 = 3,20,000 shares

X. Pro-rata 5 : 4

(4/5) X = 2,00,000 ⇒ X = 2,50,000

Rejected = 3,20,000 − 2,50,000

= 70,000 shares