Question:
If a share of ₹10 issued at a premium of ₹2 per share, on which ₹8 (including premium) has been called and ₹6 (including premium) has been paid by the shareholder, is forfeited, then Share Capital Account will be debited with:
If a share of ₹10 issued at a premium of ₹2 per share, on which ₹8 (including premium) has been called and ₹6 (including premium) has been paid by the shareholder, is forfeited, then Share Capital Account will be debited with:
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While calculating the amount debited to the Share Capital Account during forfeiture, always exclude the share premium and consider only the nominal value of the called-up share capital.
Updated On: Feb 21, 2026
- ₹10
- ₹4
- ₹8
- ₹6
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The Correct Option is D
Solution and Explanation
To calculate the amount debited to the Share Capital Account upon forfeiture of shares, consider the following:
Step 1:} Determine the nominal value of the share.
The nominal value of the share is ₹10.
Step 2:} Calculate the called-up amount excluding the premium.
The total called-up amount is ₹8, which includes a premium of ₹2. Hence, the called-up amount for the share capital is:
\[
\text{Called-up Capital} = ₹8 - ₹2 = ₹6.
\]
Step 3: Debit the Share Capital Account with the called-up capital.
The shareholder has paid ₹6 (including premium), meaning that the full amount of the called-up capital (₹6) is debited to the Share Capital Account upon forfeiture.
Final Answer:
The Share Capital Account will be debited with 6
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