Calls- in- Arrears

Sometimes shareholders may fail to pay the amount due on calls. The total amount not received on the calls by the company are called as Calls-in-Arrears. This amount is shown as a deduction from the calledup capital to arrive the paid up share capital in the Balance Sheet. The accounting entry passed to record the same is:

According to Table A, normally an interest of 5 % is charged on calls-in-arrears till such amount is actually paid. However the Directors can waive this interest or charge a higher rate at their discretion.

Illustration :

Robert & Co Ltd. issues 20,000 shares of Rs.10/- each payable Rs.3 on application, Rs. 2 on allotment, Rs. 2.50 on First call and the balance on final call.

All shares were subscribed and allotted. Calls were made in due course but the first call money on 1000 shares and final call money on 1500 shares were not yet received. Pass journal entries.

Date	Particulars	L.F	Debit Rs.	Credit Rs.
	Bank A/c                                           Dr		60,000
	To Share Application A/c			60,000
	(Application money received on 20000 shares @ Rs.3 per share)
	Share Application A/c                        Dr		60,000
	To Share Capital a/c			60,000
	(Transfer of application money to share capital a/c)
	Share Allotment A/c                 Dr		40,000
	To Share Capital A/c			40,000
	(Allotment money due on 20000 shares @ Rs.2 per share)
	Bank A/c                                       Dr		40,000
	To Share allotment A/c			40,000
	(Allotment money received)
	Share First call A/c                  Dr		50,000
	To Share Capital A/c			50,000
	(First call amount due on 20000 shares @ Rs.2.50 per share)
	Bank A/c                                     Dr		47,500
	Calls-in-arrears a/c                Dr		2,500
	To Share First Call A/c			50,000
	(First call money received on 19000 shares)
	Share Second Call A/c       Dr		50,000
	To Share Capital A/c			50,000
	(Final call money on 20000 shares @ 2.50 per share due)
	Bank A/c                               Dr		46,250
	Calls in arrears A/c           Dr		3,750
	To Share Second call a/c			50,000
	(Final call money received on 18,500 shares)