Question

If a share of 100 on which 80 was called up and 70 paid up was forfeited, state the amount with which the share capital account will be debited:

• A. 100
• B. 80
• C. 70
• D. 10

Answer 1

The Correct Option is B

To address this issue, comprehending share forfeiture in accounting is crucial. Upon forfeiture, the share capital account is debited by the amount called up on that specific share. The provided data is as follows:

• Nominal value of the share: 100
• Amount called: 80
• Amount paid: 70

The company's expectation from the shareholder is represented by the called-up amount (80). Consequently, this is the sum debited to the share capital account during forfeiture, regardless of the amount actually paid by the shareholder.

Thus, the share capital account will be debited by 80.