If a share of ₹100 on which ₹80 was called up and ₹70 paid up was forfeited. State the amount with which share capital account will be debited:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → ₹80.
The share was forfeited, and the amount with which the share capital account will be debited is based on the amount that was originally called up but not fully paid.
- The share's nominal value is ₹100.
- ₹80 was called up.
- ₹70 was paid up, leaving ₹10 unpaid (i.e., ₹80 - ₹70 = ₹10).
When the share is forfeited, the amount called up on the share (₹80) is considered, not just the paid-up amount. The capital account will be debited by the called-up amount (₹80) as the company loses that amount.
Thus, the amount with which the share capital account will be debited is ₹80.