Question:
VL Ltd. offered for public subscription 90,000 equity shares of ₹ 10 each at a premium of 10%. The entire amount was payable on application. Applications were received for 1,00,000 shares and allotment was made to all the applicants on pro-rata basis. The amount received on application was___.
VL Ltd. offered for public subscription 90,000 equity shares of ₹ 10 each at a premium of 10%. The entire amount was payable on application. Applications were received for 1,00,000 shares and allotment was made to all the applicants on pro-rata basis. The amount received on application was___.
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When shares are allotted on a pro-rata basis, always calculate amount received only on the number of shares actually allotted—not the number applied.
Updated On: Jul 4, 2025
- ₹ 10,00,000
- ₹ 9,00,000
- ₹ 9,90,000
- ₹ 11,00,000
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The Correct Option is C
Solution and Explanation
Step 1: Total number of shares applied = 1,00,000
Step 2: Total shares issued = 90,000
Allotment was made on pro-rata basis, so application money will be received only for 90,000 shares. Step 3: Calculate issue price per share:
Face Value = ₹ 10, Premium = 10% of ₹ 10 = ₹ 1
Total Issue Price = ₹ 11 per share Step 4: Calculate total amount received:
\[ 90,000 \times 11 = ₹ 9,90,000 \]
Step 2: Total shares issued = 90,000
Allotment was made on pro-rata basis, so application money will be received only for 90,000 shares. Step 3: Calculate issue price per share:
Face Value = ₹ 10, Premium = 10% of ₹ 10 = ₹ 1
Total Issue Price = ₹ 11 per share Step 4: Calculate total amount received:
\[ 90,000 \times 11 = ₹ 9,90,000 \]
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