Question

Skyline Ltd. invited applications for 20,000 shares of ₹ 10 each, payable as:

On 1st June, 2024	₹ 3 on Application
On 1st July, 2024	₹ 2 on Allotment
On 1st September, 2024	₹ 2 on First Call
On 1st December, 2024	₹ 3 on Second and Final Call

Shares were fully subscribed.

Vikram, a shareholder holding 2,000 shares, paid the entire money with the allotment. As per the Articles of Association, Interest on Calls-in-Advance was allowed @ 12% per annum.

You are required to do the following during the year 2024-25:

1. Pass the necessary journal entries in the books of Skyline Ltd. to record Interest on Calls-in-Advance.
2. Prepare Share Capital Account.
3. Prepare Calls-in-Advance Account.

Answer 1

Journal Entries for Interest on Calls-in-Advance
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2024
Dec 1	Interest on Calls-in-Advance A/c   ... Dr.		380	-
	To Sundry Shareholders A/c		-	380
	(Being interest due on calls-in-advance @ 12% p.a.)
Dec 1	Sundry Shareholders A/c   ... Dr.		380	-
	To Bank A/c		-	380
	(Being interest on calls-in-advance paid)
2025
Mar 31	Statement of Profit & Loss   ... Dr.		380	-
	To Interest on Calls-in-Advance A/c		-	380
	(Being interest on CIA transferred to P&L A/c)

 

Dr.	Share Capital Account				Cr.
Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
2025			2024
Mar 31	To Balance c/d	2,00,000	Jun 1	By Share Application A/c	60,000
			Jul 1	By Share Allotment A/c	40,000
			Sep 1	By Share First Call A/c	40,000
			Dec 1	By Share Second & Final Call A/c	60,000
		2,00,000			2,00,000

 

Dr.	Calls-in-Advance Account				Cr.
Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
2024			2024
Sep 1	To Share First Call A/c	4,000	Jul 1	By Bank A/c (Advance received)	10,000
Dec 1	To Share Second & Final Call A/c	6,000
		10,000			10,000

Working Note:

Calculation of Interest on Calls-in-Advance:

1. On First Call:

Amount = 2,000 share × 2

= 4,000

Period = From July 1 to Sept 1 (2 months)

Interest = `4,000 xx 12/100 xx 2/12`

= 80

2. On Second Call:

Amount = 2,000 share × 3

= 6,000

Period = From July 1 to Dec1 (5 months)

Interest = `6,000 xx 12/100 xx 5/12`

= 300

Total Interest Payable = 80 + 300

= 380

Calls-in-Advance:

Vikram paid ₹ 2 (1st call) and ₹ 3 (2nd call) early on 2,000 shares.

So,

2,000 × 5

= 10,000