Accountancy Part AAccounting for Shares

Ninza Ltd. forfeited 1,200 shares of ₹10 each, on which ₹8 per share…

Ninza Ltd. forfeited 1,200 shares of ₹10 each, on which ₹8 per share as called up and ₹6 per share was paid up. The amount with which share Capital Account will be debited at the time of forfeiture of Share will be:

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → ₹9,600

On forfeiture, share capital is debited with the amount called up on the forfeited shares, not with their face value or with the amount paid.

Share Capital A/c debited = 1,200 × ₹8 = ₹9,600
Share Forfeiture A/c credited = 1,200 × ₹6 = ₹7,200
Calls in arrears credited = 1,200 × ₹2 = ₹2,400

NCERT (2026-27 edition):
Forfeiture of Shares – “… It may be noted here that when the shares are forfeited, all entries relating to the forfeited shares must be reversed except the entry relating to share premium received, if any. Accordingly, the share capital is debited to the extent to called-up capital and credited to (i) respective unpaid calls account i.e., calls in arrears and (ii) share forfeiture account with the amount already received on shares.”