At the time of forfeiture of shares, Share Capital A/c will be debited with:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Called Up Amount
When shares are issued, Share Capital is credited with each instalment as it is called. Forfeiture reverses those entries, so Share Capital is debited with the amount called up on the forfeited shares. The amount actually received goes to the credit of Share Forfeiture A/c, and the unpaid part to the credit of the calls account (or Calls in Arrears).
Why the other options are incorrect
Option (1) Issued Price — Incorrect. The issue price includes any premium, and a premium already received is not reversed on forfeiture; it stays in the Securities Premium Account.
Option (2) Uncalled Up Amount — Incorrect. An amount not yet called was never credited to Share Capital, so there is nothing to reverse.
Option (4) Paid Up Amount — Incorrect. The paid-up amount is what the shareholder actually paid, and it is credited to Share Forfeiture A/c. Share Capital itself was credited with the whole called-up amount, paid or not.
NCERT (2026-27 edition): |