If a share of ₹10 is issued at a premium of ₹3, on which the full amount has been called and ₹8 has been paid on it (including premium), is forfeited, then the share capital is debited with:
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹10.
Premium is paid by the shareholder so there is no use of premium. It is assumed that premium is paid on allotment and call is not paid by the shareholder.
Journal entry for the share forfeiture is-
Share Capital A/c Dr. ₹10 (calledup)
To share Forfeiture ₹5 (paidup)
To share call A/c ₹5 (not paidup)
Thus, ₹10 is debited to share capital account.