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When the shares are forfeited by the company, the share capital account is debited with: |
Amount of face value of shares Amount called up on the shares forfeited till the date of forfeiture Paid-up value of shares as on date of forfeiture The market value of shares as on date of forfeiture of shares |
Amount called up on the shares forfeited till the date of forfeiture |
The correct answer is option 2- Amount called up on the shares forfeited till the date of forfeiture. Accordingly, share capital account is debited with the amount called-up in respect of shares are forfeited and crediting the respective unpaid calls account’s or calls in arrears account with the amount already received. Journal entry on forfeiture of shares- Share Capital A/c Dr. (Called up amount) |
