Question

If a share of 100 on which 80 was called up and 70 paid up was forfeited, state the amount with which the share capital account will be debited:

• A. 100
• B. 80
• C. 70
• D. 10

Answer 1

The Correct Option is B

When a share is forfeited, the Share Capital Account is debited with the amount of called-up capital, not the paid-up capital.

• The face value of the share is 100.
• The called-up capital is 80 (i.e., 80 was called up).
• The paid-up capital is 70 (i.e., 70 was paid).

The amount debited to the Share Capital Account will be the called-up capital, which is 80. The difference between the called-up capital and the paid-up capital (i.e., 80 - 70 = 10) is transferred to the Share Forfeited Account.

Therefore, the Share Capital Account will be debited with 80.

Thus, the correct answer is (B): 80.

Answer 2

When a share is forfeited, the share capital account is debited by the amount that has been called up but not fully paid. In this case, the share was issued for 100, and 80 was called up, but only 70 was paid up. Therefore, the amount debited to the share capital account upon forfeiture is the called up amount of 80.