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Kiran Ltd. issued 10,000 equity shares of ₹10 each at par, payable ₹2 on application, ₹3 on allotment and the balance on call. Applications were received for 15,000 shares; applicants of 3,000 shares were refused and money returned, and the rest were allotted 10,000 shares pro rata. What is the amount of application money to be refunded in cash?

The cash refund is ₹6,000. Applicants for 3,000 shares were rejected, and their application money at ₹2 per share is returned. The excess on the pro rata group, 2,000 shares at ₹2 or ₹4,000, is not refunded because it is adjusted against allotment money due.

  1. A₹6,000Correct
  2. B₹10,000
  3. C₹14,000
  4. D₹30,000

Explanation

Refused applicants for 3,000 shares paid 3,000 × ₹2 = ₹6,000, which is refunded. The remaining 12,000 applications were allotted 10,000 shares, so the excess of 2,000 × ₹2 = ₹4,000 is adjusted to allotment, not refunded. Choosing ₹10,000 wrongly adds the adjusted excess to the refund.

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