Question

Star Cosmetics Ltd. issued 20,000, 9% Debentures of ₹ 100 each payable as follows:

On Application	₹ 30	payable on 1st June, 2024
On Allotment	₹ 30	payable on 1st August, 2024
On First & Final Call	₹ 40	1st January, 2025

All the debentures were subscribed and allotted and the amount was duly received except the allotment and first and final call money on 500 debentures. Articles of Association of the Company provided for charging interest on Calls-in-Arrears @ 8% p.a. 

Pass journal entries, prepare Calls-in-Arrears Account and show the debentures in the Balance Sheet of the Company as at 31st March, 2025.

Answer 1

Journal entries in the books of Star Cosmetics Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2024
June 1	Bank A/c   ...Dr.		6,00,000	-
	To 9% Debenture Application A/c		-	6,00,000
	(Application money received on 20,000 debentures @ ₹ 30.)
June 1	9% Debenture Application A/c   ...Dr.		6,00,000	-
	To 9% Debentures A/c		-	6,00,000
	(Application money transferred to Debentures A/c.)
August 1	9% Debenture Allotment A/c   ...Dr.		6,00,000	-
	To 9% Debentures A/c		-	6,00,000
	(Allotment money due on 20,000 debentures @ ₹ 30.)
August 1	Bank A/c   ...Dr.		5,85,000	-
	Calls-in-Arrears A/c   ...Dr.		15,000	-
	To 9% Debenture Allotment A/c		-	6,00,000
	(Allotment received, 500 debentures unpaid.)
2025
January 1	9% Debenture First & Final Call A/c   ...Dr.		8,00,000	-
	To 9% Debentures A/c		-	8,00,000
	(First & Final Call due @ ₹ 40 on 20,000 debentures.)
January 1	Bank A/c   ...Dr.		7,80,000	-
	Calls-in-Arrears A/c   ...Dr.		20,000	-
	To 9% Debenture First & Final Call A/c		-	8,00,000
	(Final call received, 500 debentures unpaid.)
March 31	Interest on Calls-in-Arrears A/c   ...Dr.		1,200	-
	To Star Cosmetics Ltd. (Outstanding Debtors)		-	1,200
	(Interest on calls-in-arrears @ 8% p.a. on ₹ 15,000 + ₹ 20,000.)

 

Calls-in-Arrears Account
Particulars	Amount (₹)	Particulars	Amount (₹)
To 9% Deb. Allotment A/c	15,000	By Balance c/d	35,000
To 9% Deb. First & Final Call A/c	20,000
	35,000		35,000

 

Balance Sheet as at 31st March, 2025.
	Particulars	Note No.	Amount (₹)
I.	EQUITY AND LIABILITIES
	1. Non-Current Liabilities
	Long-term Borrowings	1	19,65,000
	Total		19,65,000

Notes to Accounts:

Particulars	Amount (₹)
Long-term borrowings
20,000, 9% Debentures of ₹100 each	20,00,000
Less: Calls-in-Arrers	35,000
Total	19,65,000