Rohit & Company issued 30,000 shares of ₹10 each payable:

| Particulars | Amount (₹) |
|---|---|
| On Application | 3 |
| On Allotment | 3 |
| On First Call (after two months) | 2 |

All money due on allotment was received, but when the first call was made a shareholder having 4

Question

Rohit & Company issued 30,000 shares of ₹10 each payable:

| Particulars | Amount (₹) |
|---|---|
| On Application | 3 |
| On Allotment | 3 |
| On First Call (after two months) | 2 |

All money due on allotment was received, but when the first call was made a shareholder having 400 shares did not pay the first call and a shareholder of 300 shares paid the money for the second and final call of ₹2 which had not been made as yet.

Give the necessary journal entries in the books of the company.

Accepted Answer

> [!TLDR]
> Application (₹90,000) and allotment (₹90,000) are received in full. On the first call of ₹2 per share, 400 shares default (Calls in Arrears ₹800) and a 300-share holder pays the not-yet-made second and final call in advance (Calls in Advance ₹600) — so ₹59,800 is banked against a ₹60,000 call due.

### Concept
The first call is recorded as *due* on all 30,000 shares (Share First Call A/c debited in full against Share Capital). What is received differs from what is due: a defaulter creates **Calls in Arrears** (a receivable), and a shareholder paying a future call that has *not yet been made* creates **Calls in Advance** (a liability). Both appear in the one receipt entry so the First Call A/c is fully squared off.

### Working Notes
- First call due: 30,000 shares × ₹2 = ₹60,000.
- Cash on first call: (30,000 − 400) = 29,600 shares × ₹2 = ₹59,200.
- Calls in advance: 300 shares × ₹2 (second and final call) = ₹600.
- Total cash banked: ₹59,200 + ₹600 = ₹59,800.
- Calls in arrears: 400 shares × ₹2 = ₹800.

### Solution
**Books of Rohit & Company — Journal**

| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
|------|-------------|------|-----------|------------|
| | Bank A/c Dr. | | 90,000 | |
| | To Share Application A/c | | | 90,000 |
| | *(Application money received on 30,000 shares @ ₹3 per share)* | | | |
| | Share Application A/c Dr. | | 90,000 | |
| | To Share Capital A/c | | | 90,000 |
| | *(Application money transferred to share capital account)* | | | |
| | Share Allotment A/c Dr. | | 90,000 | |
| | To Share Capital A/c | | | 90,000 |
| | *(Allotment money due on 30,000 shares @ ₹3 per share)* | | | |
| | Bank A/c Dr. | | 90,000 | |
| | To Share Allotment A/c | | | 90,000 |
| | *(Allotment money received)* | | | |
| | Share First Call A/c Dr. | | 60,000 | |
| | To Share Capital A/c | | | 60,000 |
| | *(First call money due on 30,000 shares @ ₹2 per share)* | | | |
| | Bank A/c Dr. | | 59,800 | |
| | Calls in Arrears A/c Dr. | | 800 | |
| | To

Particulars	Note No.	Amount (₹)
1. Shareholders’ Funds
(a) Share Capital	1	1,00,000
(b) Reserves and Surplus	2	20,000
2. Non-Current Liabilities	...	...
3. Current Liabilities	...	...

Particulars	Amount (₹)
Authorised Capital
1,00,000 Equity Shares of ₹10 each	10,00,000
Issued Capital
80,000 Equity Shares of ₹10 each	8,00,000
Subscribed and Paid-up Capital
80,000 Equity Shares of ₹10 each fully paid	8,00,000

Concept understanding — Share Capital Accounting

Why does share capital matter in accounting?

The precise meaning (NCERT Class 12)

Accounting treatment — the journal entries

Step 1: Application money received

Step 2: Transfer application money to Share Capital

Step 3: Allotment money due

Step 4: Allotment money received

The Balance Sheet format (as per NCERT)

Concept

Working Notes

Solution

Particulars	Amount (₹)
On Application	3
On Allotment	3
On First Call (after two months)	2

Date	Particulars	Debit (₹)	Credit (₹)
	Bank A/c Dr.	40,000
	To Share Application A/c		40,000
(Being application money received on 10,000 shares @ ₹4 each)

Date	Particulars	Debit (₹)	Credit (₹)
	Share Application A/c Dr.	40,000
	To Share Capital A/c		40,000
(Being application money transferred to Share Capital)

Date	Particulars	Debit (₹)	Credit (₹)
	Share Allotment A/c Dr.	60,000
	To Share Capital A/c		60,000
(Being allotment money due on 10,000 shares @ ₹6 each)

Date	Particulars	Debit (₹)	Credit (₹)
	Bank A/c Dr.	60,000
	To Share Allotment A/c		60,000
(Being allotment money received)

Particulars	Debit (₹)	Credit (₹)
Bank A/c Dr.	59,800
Calls in Arrears A/c Dr.	800
To Share First Call A/c		60,000
To Calls in Advance A/c		600

Particulars	Debit (₹)	Credit (₹)
Bank A/c Dr.	90,000
To Share Application A/c		90,000
(Application money received on 30,000 shares @ ₹3 per share)
Share Application A/c Dr.	90,000
To Share Capital A/c		90,000
(Application money transferred to share capital account)
Share Allotment A/c Dr.	90,000
To Share Capital A/c		90,000
(Allotment money due on 30,000 shares @ ₹3 per share)
Bank A/c Dr.	90,000
To Share Allotment A/c		90,000
(Allotment money received)
Share First Call A/c Dr.	60,000
To Share Capital A/c		60,000
(First call money due on 30,000 shares @ ₹2 per share)
Bank A/c Dr.	59,800
Calls in Arrears A/c Dr.	800
To Share First Call A/c		60,000
To Calls in Advance A/c		600
(Calls in arrears for 400 shares @ ₹2 per share and calls in advance on 300 shares @ ₹2 per share)

Concept

Working Notes

Solution

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