Question

Passage: Issue and Forfeiture of Shares On January 1, 2024, the Director of X Ltd. issued for public subscription 50,000 equity shares of Rs. 10 each at Rs. 12 per share payable, Rs. 5 on application (including premium), Rs. 4 on allotment and the balance on call on May 01, 2024. The issue was closed on February 10, 2024 by which date applications for 70,000 shares were received. Of the cash received Rs. 40,000 was returned and Rs. 60,000 was applied to the amount due on allotment, the balance of which was paid on February 16, 2024. All the shareholders paid the call due on May 01, 2024 with the exception of an allottee of 500 shares. These shares were forfeited on September 29, 2024 and reissued as fully paid at Rs. 8 per share on November 01, 2024. The company, as a matter of policy, does not maintain a calls-in-arrears account. % Question What amount will be credited to Equity Share Application Account on February 10, 2024?

• A. Rs. 2,50,000
• B. Rs. 3,00,000
• C. Rs. 3,50,000
• D. Rs. 4,50,000

Hint:

Remember: Application Account is credited with the total application money received, before any refund or adjustment to allotment.

Answer 1

The Correct Option is C

Step 1: Determine the number of shares applied for.
Applications received: 70,000 shares.
Application money per share: Rs. 5 (inclusive of premium).

Step 2: Calculate the total application money received.
\( 70,000 \times 5 = Rs. 3,50,000 \).

Step 3: Adjustments.
From the total Rs. 3,50,000 received, Rs. 40,000 was refunded, and Rs. 60,000 was later adjusted towards allotment. However, the Equity Share Application Account is credited with the total application money received at the time of receipt, which is Rs. 3,50,000.

Final Answer: \[\boxed{\text{Rs. 3,50,000 will be credited to Equity Share Application Account on February 10, 2024.}}\]