Question 16 of 61beginner💡 UnderstandVery Short1 mark

If a Share of Rs. 10 on which Rs. 8 is called-up and Rs. 6 is paid as forfeited. State with what amount the Share Capital account will be debited.

Correct Answer

The Share Capital Account will be debited with Rs. 8.

Exercise: Test Your Understanding – III | Q: 1 | (Page 58)
For More Understanding

Explanation

According to the provided context, when shares are forfeited, the share capital account is debited with the amount called-up in respect of the shares forfeited. In this scenario, the share of Rs. 10 has Rs. 8 called-up, hence the account is debited by that amount.

Solution Steps

  1. Step 1: Identify the called-up value of the share from the question. The share has a face value of Rs. 10, but only Rs. 8 is called-up.

  2. Step 2: Apply the accounting rule for forfeiture found in the context, which states that 'share capital is debited to the extent to called-up capital'.

  3. Step 3: Conclude that the Share Capital account is debited by the called-up amount of Rs. 8.

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