Question

When shares are forfeited, the share capital account is debited with _______ and the Share Forfeited Account is credited with ________.

• A. Paid-up capital of shares forfeited; Called up capital of shares forfeited
• B. Called up capital of shares forfeited; Calls-in-arrears of shares forfeited
• C. Called up capital of shares forfeited; Amount received on shares forfeited
• D. Calls-in-arrears of shares forfeited; Amount received on shares forfeited

Answer 1

The correct option is C Called up capital of shares forfeited; Amount received on shares forfeited

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.