Calls-In-Arrears

A. For Calls-in-Arrears:

1. Without Opening Calls-in-Arrears Account:

(Amount not received is simply left unpaid in the relevant call account)
No separate entry is passed. The unpaid amount is shown as a balance in the relevant call account (e.g., Shares Allotment A/c or Call A/c).

2. With Opening Calls-in-Arrears Account:

(i) On non-receipt of call amount on the due date:

Calls-in-Arrears A/c          ...Dr.

      To Relevant Call A/c

(e.g., To Shares Allotment A/c or Shares First Call A/c) 

(Being the amount not received on call, transferred to Calls-in-Arrears)

(ii) On receipt of the amount later:

Bank A/c                     ...Dr.

       To Calls-in-Arrears A/c

(Being the amount received on Calls-in-Arrears)

• Calls-in-arrears refers to the unpaid amount of allotment or call money by shareholders.
• It arises when shares are issued on an instalment basis, and payments are missed.
• The company may charge interest on calls-in-arrears, usually at 10% per annum if not specified in the Articles.
• It can be recorded either by opening a separate Calls-in-Arrear Account or without it.
• The interest collected on calls-in-arrears is treated as income in the Profit and Loss Statement.