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Question
When shares are forfeited, the Share Capital A/c is debited with ______ and the Share Forfeiture A/с is credited with ______.
Options
paid-up capital of shares forfeited; called-up capital of shares forfeited.
called-up capital of shares forfeited; Calls-in-Arrears of shares forfeited.
called-up capital of shares forfeited; amount received on shares forfeited.
Calls-in-Arrears of shares forfeited; amount received on shares forfeited.
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Solution
When shares are forfeited, the Share Capital A/c is debited with called-up capital of shares forfeited and the Share Forfeiture A/с is credited with amount received on shares forfeited.
Explanation:
On forfeiture, Share Capital A/c is debited with the amount called-up on the forfeited shares. Share Forfeiture A/c is credited with the amount already received on those shares.
