Accountancy Part AAccounting for Shares

If a share of ₹10 is issued at a premium of ₹3, on which the full amo…

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

On forfeiture, Share Capital Account is debited with the amount called up on the share. The full amount has been called, so the called-up capital is the face value of ₹10.

The ₹3 premium was received (it is part of the ₹8 paid), so the Securities Premium Reserve is not reversed.

Amount paid towards capital = ₹8 − ₹3 = ₹5 (credited to Share Forfeiture A/c); unpaid ₹5 is credited to the call account.

Share Capital A/c is debited with ₹10.

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