At the time of forfeiture of shares, share capital account will be debited by:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Called-up amount
On forfeiture, the entries made for the forfeited shares are reversed. Share Capital was credited with every amount called up on those shares, so it is debited with the called-up amount; the unpaid calls are credited and the amount received goes to Share Forfeiture Account.
Option (1) Face Value — Incorrect. Face value is debited only when the shares were fully called up.
Option (2) Paid-up amount — Incorrect. The paid-up amount is what is credited to Share Forfeiture Account.
Option (3) Unpaid amount — Incorrect. The unpaid amount is credited to the unpaid call accounts.
NCERT (2026-27 edition): |