Question

Shiv, the holder of 100 shares paid his first call of ₹4 per share on 1st May, 2023, along with his allotment money. First Call is due on 1st September, 2023.

Interest is allowed by the company on calls-in-advance as per the provisions of Table F of the Companies Act, 2013.

You are required to give the adjusting entry and closing entry for interest on calls-in-advance.

Answer 1

Given:

• Number of shares = 100

• Amount paid in advance = ₹4 per share

• Total amount in advance = 100 × ₹4 = ₹400

• Rate of interest = 6% p.a. (as per Table F)

• Period = 4 months (from 1st May to 1st Sept)

Interest = `₹400 xx 6/100 xx 4/12 = ₹400 xx 0.02`

= ₹8