A company forfeited 500 shares of ₹10, called up ₹8 for non payment of allotment money of ₹5. How much amount will be debited to Share Capital account at the time of forfeiture?

₹4,000

The correct answer is option 3- ₹4,000.

When shares are forfeited, the debited amount to the Share Capital account is the total amount of the called-up value of the forfeited shares.  In this case, the called-up value is Rs 8 per share.

Number of shares forfeited = 500
Called-up value per share = ₹8
Amount debited to Share Capital account = Number of shares forfeited * Called-up value per share Amount 
                                                                 = 500 x ₹8
                                                                 = ₹4,000