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:

• A. ₹10
• B. ₹4
• C. ₹8
• D. ₹6

Hint:

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.

Answer 1

The Correct Option is D

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