Reference no: EM133004638

On 1 March 2019 Queen Nandi Ltd was registered with an authorised share capital of 500 000 ordinary shares and 10% 100 000 preference shares. The founders of the company subscribed to 22% of the ordinary shares at R1,50 per share and paid for it in full. The financial year end of the company was set as 28 February.

On 15 January 2020 Queen Nandi Ltd offered 42% of the authorised ordinary shares to the public at R2,50 per share and 75% of the 10% preference shares at R2,00 per share. The company appointed Langeni Bank as the underwriter of the share issue of all shares at a commission of 1%.

By 1 March 2020, the closing date for the applications, 125% of the offered ordinary shares and 60 000 10% preference shares were applied for. On 31 March 2020 all the offered shares were allotted by the board of directors, the cash of the unsuccessful applicants were repaid, and the underwriter's account was settled in full.

During a board meeting on 15 February 2021, the directors declared a dividend of R0,20 per share. The dividends were paid on 2 March 2021.

Problem 1: Which one of the following alternatives represents the correct settlement amount on 31 March 2020, on the underwriting agreement between Queen Nandi Ltd and Langeni Bank?

A. 23 500

B. 6 750

C. 6 500

D. 22 875

E. 7 125

F. 23 250