Accountancy Part AAccounting for Shares

1,200 shares of Rs. 20 each were forfeited for non-payment of Rs. 4 p…

1,200 shares of Rs. 20 each were forfeited for non-payment of Rs. 4 per share on first call and Rs. 10 per share on final call. Share forfeiture account will be credited with ________.

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → Rs. 7,200

On forfeiture, Share Forfeiture Account is credited with the amount the shareholders have already paid, not with what they failed to pay.

Unpaid per share = Rs. 4 (first call) + Rs. 10 (final call) = Rs. 14
Paid per share = Rs. 20 − Rs. 14 = Rs. 6
Share Forfeiture A/c = 1,200 × Rs. 6 = Rs. 7,200

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.”