Question

Rudali Ltd. invited applications for issuing 2,00,000 equity shares of Rs 10 each at a premium of Rs 2 per share. Rs 5 per share (including premium) was payable on application. Applications for 2,60,000 shares were received. An applicant for 5,000 shares paid his entire share money along with application. The amount received on application was:

• A. Rs 10,00,000
• B. Rs 12,00,000
• C. Rs 12,35,000
• D. Rs 13,35,000

Hint:

All 2,60,000 applications pay Rs. 5 per share. The applicant who paid in full adds Rs. 7 per share on 5,000 shares.

Answer 1

The Correct Option is D

Step 1: Read the data:
Rudali Ltd. offered 2,00,000 equity shares of Rs. 10 each at a premium of Rs. 2. Rs. 5 per share (including premium) was payable on application.
Applications came for 2,60,000 shares. One applicant for 5,000 shares paid the whole share money with the application. The question asks for the application money received.

Step 2: Recall the rule:
Every applicant pays the application amount on every share applied for. Excess applications are dealt with later, at allotment.
An applicant who pays more than asked still pays that cash on application, so the cash received on application includes the advance.

Step 3: Calculate:
Full price per share = Rs. 10 + Rs. 2 = Rs. 12.
Normal application money = 2,60,000 x Rs. 5 = Rs. 13,00,000.
Extra paid by the one applicant = 5,000 x (Rs. 12 - Rs. 5) = 5,000 x Rs. 7 = Rs. 35,000.
Total received = Rs. 13,00,000 + Rs. 35,000 = Rs. 13,35,000.

Step 4: Check the answer another way:
Applicants for 2,55,000 shares paid Rs. 5 each = Rs. 12,75,000.
The applicant for 5,000 shares paid Rs. 12 each = Rs. 60,000.
Total = Rs. 12,75,000 + Rs. 60,000 = Rs. 13,35,000. Both routes agree.

Step 5: Why the other options are wrong:
Option (A), Rs. 10,00,000, is wrong. It is 2,00,000 shares offered x Rs. 5. Money is paid on applications received, which is 2,60,000 shares.
Option (B), Rs. 12,00,000, is wrong. It starts from the shares offered and not from the applications received. It is even less than Rs. 13,00,000.
Option (C), Rs. 12,35,000, is wrong. It adds the extra Rs. 35,000 to a wrong base of Rs. 12,00,000. The base must be 2,60,000 x Rs. 5.

Final Answer:
The application money received is Rs. 13,35,000. This is option (D).