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Question

If a share of Rs. 10 on which Rs. 8 is called -up and Rs. 6 paid is forfeited, the Share Capital Account will be debited with _________.

A
Rs. 10
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B
Rs. 8
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C
Rs. 6
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D
Rs. 4
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Solution

The correct option is C Rs. 8
Shares are issued at a face value against which a certain amount is called up. The called up amount is credited to share capital account.

Once the shares are forfeited, a reversal entry need to be passed in books of account by debiting the share capital account by the amount of called up amount.

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