Identify the amount by which bank account would be debited/credited on refund of rejected applications

The correct option is 21,000 Credit.

Let us understand the step-by-step accounting reasoning behind this answer.

1. Understanding Bank Transactions in Accounting:
When a company receives application money from investors, the bank account (an asset) increases. Therefore, the bank account is initially debited when application money is received.
$\mathrm{Bank\; A/c}Dr.$
Conversely, when applications are rejected and the application money is refunded back to the applicants, the bank balance decreases. According to the rules of double-entry bookkeeping, a decrease in an asset account (like Bank) is recorded as a Credit.

2. Journal Entry for Refund of Application Money:
The journal entry to record the refund of rejected application money is:
$\mathrm{Share\; Application\; A/c}Dr.To\; Bank\; A/c$
As seen in the entry above, the Bank Account is credited on the refund of rejected applications.

3. Determining the Amount:
Based on the provided correct option, the amount to be refunded is 21,000. Therefore, the bank account is credited with this amount upon refunding the rejected applications.