Read the following passage and answer the questions.
On January 1, 2024, the Director of X Ltd. issued for public subscription 50,000 equity shares of ₹10 each at ₹12 per share payable, ₹5 on application (including premium), ₹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 ₹40,000 was returned and ₹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 ₹8 per share on November 01, 2024. The company, as a matter of policy, does not maintain a calls-in-arrears account.
What amount will be credited to Equity Share Application Account on February 10, 2024?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Rs. 3,50,000
On the day the lists close, all the application money received is first credited to Equity Share Application Account, whatever number of shares is later allotted. Refunds and adjustments are passed afterwards, on allotment.
Applications received = 70,000 shares
Application money per share (including premium) = Rs. 5
Amount credited on February 10, 2024 = 70,000 × Rs. 5 = Rs. 3,50,000
The entry is Bank A/c Dr. Rs. 3,50,000; To Equity Share Application A/c Rs. 3,50,000. Rs. 2,50,000 is the application money on the 50,000 shares finally allotted, which is moved out of this account only on allotment.
NCERT (2026-27 edition):
NCERT (2026-27 edition):
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