Accounting Treatment of Call in arrear and call in advance

Call in Arrear
Call in arrear means company has demanded his due amount of allotment or call money but .But if shareholder does not pay his allotment money on due date it deems as call in arrear , this is the asset of company and it must deduct from call up capital for calculation paid up capital. If there is no any rule the company has right to get 5% interest on call in arrear.
Journal Entries for call in arrear in the books of company
1st journal entry will write at the time of due but not received the allotment money from share holder
Call in Arrear Account Debit xxxx
To Share Allotment Account xxxx

2nd When call in Arrear received from shareholder
Bank Account Debit xxxx
To Call in arrear Account xxxx

3rd journal entry is related to company’s interest received on due amount of call in arrear. This is the income of company:-

Bank Account Debit xxxx
To Interest on Call in Arrear xxxx

Call in Advance
Call in advance means that company did not call the allotment or calls but shareholder gives the call money in advance form .So this is the liability of company . Company is liable to pay 6% interest on call in advance to shareholder
Journal Entry for call in Advance
1st journal entry will pass for adjustment of advance money of allotment received at the time of application
Share Allotment Account Debit xxxx
To Call in Advance xxxx

2nd Journal entry will pass for when the amount of allotment due
Call in Advance Account Debit xxxx
To Share Allotment Account xxxx

3rd Journal Entry for paying the interest on call in advance to shareholder
Interest on call in advance Account Dr. xxxx
To Bank Account xxxx


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Accounting Education: Accounting Treatment of Call in arrear and call in advance
Accounting Treatment of Call in arrear and call in advance
Accounting Education
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