Accountancy Part AAccounting for Shares

If a share of ₹50, on which ₹40 is called-up and ₹35 is paid, is forf…

If a share of ₹50, on which ₹40 is called-up and ₹35 is paid, is forfeited, then with what amount the share capital account will be debited?

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → ₹40

On forfeiture, Share Capital is debited with the called-up amount of the forfeited share; the amount paid goes to Share Forfeiture and the unpaid amount to the call account.

Share Capital A/c Dr. ₹40

To Share Forfeiture A/c ₹35

To Calls in Arrears A/c ₹5

Share Capital is debited with ₹40.

NCERT (2026-27 edition):
Forfeiture of Shares – “… It may be noted here that when the shares are forfeited, all entries relating to the forfeited shares must be reversed except the entry relating to share premium received, if any. Accordingly, the share capital is debited to the extent to called-up capital and credited to (i) respective unpaid calls account i.e., calls in arrears and (ii) share forfeiture account with the amount already received on shares.”

NCERT (2026-27 edition):
Test Your Understanding – III

Extract from the NCERT textbook