A share having a face value of Rs.12, on which Rs. 10 is called-up and Rs. 8 is paid, is forfeited. State the amount with which the Share Capital account will be debited.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → 10
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The face value of the share is ₹12, but only ₹10 has been called-up.
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When a share is forfeited, the Share Capital Account is debited with the called-up amount, not the face value or paid-up amount.
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Therefore, in this case, the debit to Share Capital A/c = ₹10.
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The journal entry for forfeiture is:
Share Capital A/c Dr. (With called-up amount)To Share Forfeited A/c Cr. (With amount received)To Calls-in-Arrears A/c Cr. (With unpaid amount)