Applications were received for 70,000 shares but only 50,000 shares were to be allotted.
Application money per share = Rs. 5 (including premium)
Total application money received = 70,000 × Rs. 5 = Rs. 3,50,000
Application money required for 50,000 allotted shares = 50,000 × Rs. 5 = Rs. 2,50,000
Excess application money = Rs. 3,50,000 - Rs. 2,50,000 = Rs. 1,00,000
This excess application money of Rs. 1,00,000 was utilized as follows:
- Amount refunded (returned) = Rs. 40,000
- Amount adjusted towards allotment = Rs. 60,000
Total = Rs. 40,000 + Rs. 60,000 = Rs. 1,00,000
The question asks for the total of money credited to share allotment (Rs. 60,000) and money refunded (Rs. 40,000), which equals Rs. 1,00,000.
Note: The 20,000 rejected applicants received partial refunds as some of their excess money was adjusted for the allotted shareholders' allotment dues.