Question

At the time of forfeiture of shares, ‘Share Capital Account’ is debited with:

• A. Paid-up amount on forfeited shares
• B. Called-up amount on forfeited shares
• C. Face value of shares forfeited
• D. Unpaid amount on forfeited shares

Hint:

Forfeiture Entry Recap:

• Debit Share Capital A/c \(\Rightarrow\) Face Value of shares forfeited
• Credit Share Forfeiture A/c \(\Rightarrow\) Amount already received
• Credit Calls-in-Arrears A/c \(\Rightarrow\) Unpaid amount (if applicable)

Share Capital is always debited with the face value (nominal value) of shares, not with paid-up or called-up amount!

Answer 1

The Correct Option is C