Question

At the time of forfeiture of shares which were originally issued at a discount, the accounting entry will be
I. A Debit Share capital account with the called-up value of shares forfeited.
II. A Credit Share forfeiture account with the amount received on forfeited shares.
III. A Credit Discount on issue of shares with the amount of discount allowed on forfeited shares,
IV. A Credit Calls-in-arrears with the amount due but not paid on forfeited shares.

• A. Both (I) and (IV)
• B. Both (IV) and (III)
• C. Both (I) and (II)
• D. (I), (II), (III), and (IV)

Answer 1

The correct option is D (I), (II), (III), and (IV)

When Forfeiture of shares Issued at ParIn this case, The company debits the Share Capital Account with the amount called-up up to the date of forfeiture on shares.

It credits the Shares Allotment Amount or Shares Call Account with amount called-up on forfeited shares but due from the shareholders.