Calls in Arrears and Calls in Advance
Calls in Arrears refers to that portion of the capital, which has been called up but not yet paid by shareholders. In other words the allotment or call money called by the company but not paid by the shareholder till the last day fixed for payment there of, is called Calls in Arrears. Share Allotment Account and call Accounts will show debit balances equal to the total unpaid amount. Generally, such amount is transferred to special account called Calls in Arrears Account. The main purpose is to close allotment and other call accounts. The entry is
Calls in Arrears Account Dr
To Share Allotment Account
“Share Call Account.
When the money is received from defaulting shareholder the following entry is passed:
Bank Account Dr
To Calls in Arrears Account:
The amount of Calls in Arrears is shown by a way of deduction from the called-up capital in the on Balance Sheet on the liabilities side under the head ‘share capital’. Interest calls in Arrears may be received from share holders, if the Articles of Associate so provide . If the company has adopted ‘Table A then it can charge interest @ 5% pa. from the due date to the date of actual payment.
Calls in Advance arises when there i an oversubscription of shares. The excess application money received is adjusted against the amount due on allotment or calls. Calls in Advance Account is shown separately from the paid-up capital. No dividend is payable on Calls in Advance.
Interest on calls on Advance: A company has to pay interest on calls in advance from the date of receipt of the amount till the date when call is due for payment. The rate of interest is determined by the Articles of Association.
If Articles of Association is silent then provision of Table A will apply which provides for payment of interest on calls in advance at the rate of 6 per cent pa. The entry for Payment on calls in advances is.
Interest on Calls in Advance A/c Dr.
To Bank Account
Interest on calls in advance appears account appears on the asset side of the balance sheet till it is written off.
Calls in Arrears refers to that portion of the capital, which has been called up but not yet paid by shareholders. In other words the allotment or call money called by the company but not paid by the shareholder till the last day fixed for payment there of, is called Calls in Arrears. Share Allotment Account and call Accounts will show debit balances equal to the total unpaid amount. Generally, such amount is transferred to special account called Calls in Arrears Account. The main purpose is to close allotment and other call accounts. The entry is
Calls in Arrears Account Dr
To Share Allotment Account
“Share Call Account.
When the money is received from defaulting shareholder the following entry is passed:
Bank Account Dr
To Calls in Arrears Account:
The amount of Calls in Arrears is shown by a way of deduction from the called-up capital in the on Balance Sheet on the liabilities side under the head ‘share capital’. Interest calls in Arrears may be received from share holders, if the Articles of Associate so provide . If the company has adopted ‘Table A then it can charge interest @ 5% pa. from the due date to the date of actual payment.
Calls in Advance arises when there i an oversubscription of shares. The excess application money received is adjusted against the amount due on allotment or calls. Calls in Advance Account is shown separately from the paid-up capital. No dividend is payable on Calls in Advance.
Interest on calls on Advance: A company has to pay interest on calls in advance from the date of receipt of the amount till the date when call is due for payment. The rate of interest is determined by the Articles of Association.
If Articles of Association is silent then provision of Table A will apply which provides for payment of interest on calls in advance at the rate of 6 per cent pa. The entry for Payment on calls in advances is.
Interest on Calls in Advance A/c Dr.
To Bank Account
Interest on calls in advance appears account appears on the asset side of the balance sheet till it is written off.
1 comment:
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