Zenith Apex Logistics Plc issued 150,000 ordinary shares of \text{₦}2.00 nominal value eac… — JAMB UTME

Zenith Apex Logistics Plc issued $150,000$ ordinary shares of $\text{₦}2.00$ nominal value each at a premium of $15\%$ . Payments were payable as follows:
- On Application: $\text{₦}0.50$ per share
- On Allotment: $\text{₦}1.00$ per share (including the full premium)
- On First and Final Call: $\text{₦}0.80$ per share

Applications were received for $200,000$ shares. Applications for $20,000$ shares were rejected and money refunded immediately. The surplus application money from the remaining applicants was transferred to offset the amount due on allotment. Calculate the net cash amount (in $\text{₦}$ ) received by the company on allotment.

Answer: 135000 ₦

Answer

The net cash amount received by Zenith Apex Logistics Plc on allotment is ₦135,000.

The company offered 150,000 shares. Out of 200,000 applications, 20,000 were rejected (refunded), leaving 180,000 shares for 150,000 issued shares. The excess application money is 30,000 shares × ₦0.50 = ₦15,000. Total allotment due is 150,000 shares × ₦1.00 = ₦150,000. Subtracting the ₦15,000 surplus already received leaves ₦135,000 net cash received on allotment.

Step-by-Step Solution

Determine the number of shares considered for pro-rata allotment after refunds

200,000 applied shares - 20,000 rejected shares = 180,000 shares

Rejected applications are refunded immediately and do not contribute to excess application money.

Calculate the excess application money transferred to the allotment stage

(180,000 shares - 150,000 issued shares) × ₦0.50 = 30,000 × ₦0.50 = ₦15,000

Money received on excess shares during the application stage is retained to reduce the cash required on allotment.

Calculate the total gross amount receivable on allotment

150,000 shares × ₦1.00 = ₦150,000

Allotment money includes the nominal allotment portion plus the full premium per share.

Compute the net cash received on allotment

₦150,000 (total due on allotment) - ₦15,000 (surplus application money) = ₦135,000

Net cash received is the total amount due on allotment less the pre-paid excess application funds applied.

Key Concept

Pro-rata Allotment and Treatment of Excess Application Money

Estimated Time:2m 30s

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