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.
Forfeiture of Shares issued:
Share Capital A/c..........(Called up amount) Dr.
To Share Forfeiture A/c...........(Paid up amount)
To Share Allotment A/c
To Share Calls A/c (individually)
(..... shares forfeited for non-payment of allotment money and calls made)
The above journal entry is passed on forfeiture of shares. Thus, share forfeiture account is debited with called up amount.