Which of the following are related to forfeiture of shares issued on…

Which of the following are related to forfeiture of shares issued on premium:

(A) Share capital is debited with called up amount

(B) Calls in Advance is credited

(D) Premium received on such Shares is debited, if it is received

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → (A) and (C) only

On forfeiture, the entries made for the forfeited shares are reversed, except the premium already received.

(A) Share capital is debited with called up amount Correct. Share Capital was credited with the amount called up, so the same called-up amount is debited to cancel it.

(B) Calls in Advance is credited Incorrect. The amount not paid is credited to the unpaid calls (Calls in Arrears). Calls in Advance is money paid early, which a defaulting shareholder has not paid.

(C) Share Forfeiture Account is credited with amount received Correct. The money already received is kept by the company and credited to Share Forfeiture Account.

(D) Premium received on such Shares is debited, if it is received Incorrect. Premium already received stays in Securities Premium Account. Securities Premium is debited only where the premium has not been received.

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.”