when shares are forfeited, then the amount called up on forfeited shares is debited to

When shares are forfeited due to non-payment of calls, the Share Capital Account is debited with the called-up amount on those shares.

Core Accounting Entry

This standard journal entry reverses the share capital recognition for the defaulting shareholder: Share Capital A/c Dr. (to the full called-up amount)
To Share Forfeiture A/c (amount already received/paid-up)
To Calls-in-Arrears A/c (unpaid call amounts)

The Share Forfeiture Account receives a credit for any payments already made, creating a reserve that can later fund reissue or become capital reserve.

Why This Treatment?

• Debit Share Capital : Reduces issued capital to reflect forfeited status; company no longer recognizes the shareholder's stake.

• Credit Forfeiture Account : Captures forfeited amounts as a gain (not income), held until reissue. Any reissue discount adjusts this account.

• Legal backing from company Articles of Association (e.g., Table F, Companies Act).

Scenario| Debit| Credit
---|---|---
Shares at Par| Share Capital (called-up total)| Share Forfeiture (paid- up)
Calls-in-Arrears (unpaid balance) 17
Shares at Premium| Share Capital (called-up)
Securities Premium (if applicable)| Share Forfeiture (net paid)
Calls-in-Arrears 7

Reissue Impact

Forfeited shares can be reissued at par/premium/discount. Profits go to Capital Reserve; losses debit Forfeiture Account (without depleting below paid-up original).

TL;DR : Always Share Capital Account for called-up amount—standard across textbooks and practice.

Information gathered from public forums or data available on the internet and portrayed here.