Question

Dev Ltd. issued 25,000, 8% Debentures of ₹ 100 each at a discount of 5% payable as follows:

On Application	₹ 25
On Allotment	₹ 20	On 1st August, 2024
On First Call	₹ 30	On 1st November, 2024
On Second & Final Call	Balance	On 1st February, 2025

All the debentures were subscribed and allotted.

Astha, to whom 400 debentures were allotted, paid the amounts of first and second and final calls on 31st March, 2025. As per Articles of Association of the Company, interest on Calls in Arrears is to be charged @ 9% per annum, which Astha paid on 31st March, 2025.

You are required to pass journal entries in respect of interest on Calls-in-Arrears.

Answer 1

In the Books of Dev Ltd.
Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2025
March 31	Astha’s Account   ...Dr.		570	-
	To Interest on Calls-in-Arrears A/c		-	570
	(Being interested in Calls-in-Arrears @ 9% p.a. on ₹24,000 for 5 months.)
March 31	Bank A/c   ...Dr.		570	-
	To Astha’s Account		-	570
	(Being interested in Calls-in-Arrears received from Astha.)

Working Note:

1. 1st Call:

₹ 30 × 400 = ₹ 12,000;

Interest @ 9% from 01-11-2024 to 31-03-2025 = 5 month

⇒ `₹12,000 × 9% × 5/12` = ₹ 450

2. 2nd & Final Call:

₹ 20 × 400 = ₹ 8,000;

Interest @ 9% from 01-02-2025 to 31-03-2025 = 2 months

⇒ `₹ 8,000 × 9% × 2/12` = ₹ 120

Total interest = ₹ 570