On the First Call of ₹3 per share on 8,000 equity shares, all shareholders paid the amount due except Mr. Rane, holding 200 shares. Two months later, Mr. Rane paid his arrears together with interest @ 10% p.a. Separately, Mr. Shah, holding 500 shares, paid the amount of the Secon

Question

On the First Call of ₹3 per share on 8,000 equity shares, all shareholders paid the amount due except Mr. Rane, holding 200 shares. Two months later, Mr. Rane paid his arrears together with interest @ 10% p.a. Separately, Mr. Shah, holding 500 shares, paid the amount of the Second and Final Call (₹2 per share) three months before it was due, along with his First Call money; the company allowed interest on this advance @ 12% p.a. for the three months, paid in cash when the Second and Final Call fell due. Pass the necessary journal entries.

Accepted Answer

**Working — Calls-in-Arrears (Mr. Rane).**
Amount unpaid = 200 shares × ₹3 = ₹600.
Interest @ 10% p.a. for 2 months = 600 × 10% × 2/12 = ₹10.

At the time of the First Call (Mr. Rane's ₹600 not received):

| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Bank A/c ...Dr | 23,400 | |
| Calls-in-Arrears A/c ...Dr | 600 | |
|   To Share First Call A/c | | 24,000 |
| *(Being first call money due on 8,000 shares @ ₹3 each, received in full except on 200 shares held by Mr. Rane)* | | |

On receipt of the arrears with interest, two months later:

| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Bank A/c ...Dr | 610 | |
|   To Calls-in-Arrears A/c | | 600 |
|   To Interest on Calls-in-Arrears A/c | | 10 |
| *(Being arrears on 200 shares received along with interest @ 10% p.a. for 2 months)* | | |

**Working — Calls-in-Advance (Mr. Shah).**
Amount paid in advance = 500 shares × ₹2 (Second and Final Call rate) = ₹1,000.
Interest @ 12% p.a. for 3 months = 1,000 × 12% × 3/12 = ₹30.

At the time Mr. Shah pays, along with the First Call:

| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Bank A/c ...Dr | 1,000 | |
|   To Calls-in-Advance A/c | | 1,000 |
| *(Being Second and Final Call money of ₹2 per share on 500 shares received in advance from Mr. Shah)* | | |

When the Second and Final Call actually falls due, three months later, and interest is paid: …

Particulars	Working	Amount Rs.
Application money received	30,000 x 25	7,50,000
Application money on allotted shares	25,000 x 25	6,25,000
Excess adjusted to allotment	7,50,000 - 6,25,000	1,25,000
Allotment due	25,000 x 50	12,50,000
Less: excess adjusted		1,25,000
Allotment received in cash		11,25,000
First & final call due	25,000 x 25	6,25,000
Less: unpaid on 2,500 shares (Calls-in-Arrears)	2,500 x 25	62,500
First & final call received		5,62,500

Particulars	Dr. Rs.	Cr. Rs.
Bank A/c ..... Dr.	7,50,000
To Equity Share Application A/c		7,50,000
(Application money on 30,000 shares @ Rs. 25)
Equity Share Application A/c ..... Dr.	7,50,000
To Equity Share Capital A/c		6,25,000
To Equity Share Allotment A/c		1,25,000
(Application money transferred; excess adjusted to allotment)
Equity Share Allotment A/c ..... Dr.	12,50,000
To Equity Share Capital A/c		12,50,000
(Allotment due on 25,000 shares @ Rs. 50)
Bank A/c ..... Dr.	11,25,000

Particulars	Debit (₹)	Credit (₹)
Bank A/c ...Dr	23,400
Calls-in-Arrears A/c ...Dr	600
To Share First Call A/c		24,000
(Being first call money due on 8,000 shares @ ₹3 each, received in full except on 200 shares held by Mr. Rane)

Particulars	Debit (₹)	Credit (₹)
Bank A/c ...Dr	610
To Calls-in-Arrears A/c		600
To Interest on Calls-in-Arrears A/c		10
(Being arrears on 200 shares received along with interest @ 10% p.a. for 2 months)

Particulars	Debit (₹)	Credit (₹)
Bank A/c ...Dr	1,000
To Calls-in-Advance A/c		1,000
(Being Second and Final Call money of ₹2 per share on 500 shares received in advance from Mr. Shah)

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