Read the following information about the company and answer the following question.
Subscribed and fully paid-up capital is 35,500 equity shares of ₹100 each.
Subscribed but not fully paid-up capital is 500 equity shares of ₹100 each fully called up on which ₹20 is unpaid.
Out of 500 shares, 200 shares are forfeited.

What is the treatment of calls in arrears and share forfeiture balance?

Deduct calls in arrears and Add share forfeiture balance

The correct answer is option 3- Deduct calls in arrears and Add share forfeiture balance.

Subscribed but not fully paid-up capital
300 equity shares of Rs. 100 each fully called up            30,000
Less: Calls-in-arrears
         (300×20)                                                                 6,000
                                                                                
Add: Share forfeiture A/c
        (200 shares × Rs. 80)                                             16,000 
Balance                                                                        = 30,000 - 6,000 + 16,000
                                                                                    = 40,000