The correct answer is option 4- (A)-(III), (B)-(IV), (C)-(I), (D)-(II).
| LIST I |
LIST II |
| (A) For the amount of calls received in advance |
(III) Bank A/c Dr. To Calls in Advance A/c |
| (B) Interest on Calls in Advance is due |
(IV) Interest on Calls in Advance A/c Dr. To Sundry Shareholder's A/c |
| (C) The amount of 'Calls in Advance' is adjusted |
(I) Calls in Advance A/c Dr. To Particular Call A/c |
| (D) Interest on Calls in Advance, For Interest Paid |
(II) Sundry Shareholder's A/c Dr. To Bank A/c |
(A) For the amount of calls received in advance- (III) Bank A/c Dr. To Calls in Advance A/c.
Sometimes shareholders pay a part or the whole of the amount of the calls not yet made. The amount so received from the shareholders is known as “Calls in Advance”. The amount received in advance is a liability of the company and should be credited to ‘Call in Advance Account.” The amount received will be adjusted towards the payment of calls as and when they becomes due. Table F of the Companies Act provides for the payment of interest on calls in advance at a rate not exceeding 12% per annum. The following journal entry is recorded for the amount of calls received in advance.
Bank A/c Dr.
To Calls in Advance A/c
(Amount received on call in advance)
(B) Interest on Calls in Advance is due- (IV) Interest on Calls in Advance A/c Dr. To Sundry Shareholder's A/c.
‘Calls in Advance’ is a liability of the company, it is under obligation, if provided by the Articles, to pay interest on such amount from the date of its receipt up to the date when appropriate call is due for payment. A stipulation is generally made in the Articles regarding the rate at which interest is payable. However, if Articles are silent on this account, Table F is applicable which provides for interest on calls in advance at a rate not exceeding 12% per annum. The accounting treatment of interest on Calls in Advance is as follows:
For Interest due-
Interest on Calls in Advance A/c Dr.
To Sundry Shareholder’s A/c
(Interest due on Calls in Advance)
(C) The amount of 'Calls in Advance' is adjusted- (I) Calls in Advance A/c Dr. To Particular Call A/c.
On the due date of the calls, the amount of ‘Calls in Advance’ is adjusted by the following entry :
Calls in Advance A/c Dr.
To Particular Call A/c
(Calls in advance adjusted with the call money due)
(D) Interest on Calls in Advance, For Interest Paid- (II) Sundry Shareholder's A/c Dr. To Bank A/c.
‘Calls in Advance’ is a liability of the company, it is under obligation, if provided by the Articles, to pay interest on such amount from the date of its receipt up to the date when appropriate call is due for payment. A stipulation is generally made in the Articles regarding the rate at which interest is payable. However, if Articles are silent on this account, Table F is applicable which provides for interest on calls in advance at a rate not exceeding 12% per annum. The accounting treatment of interest on Calls in Advance is as follows:
For Interest due-
Interest on Calls in Advance A/c Dr.
To Sundry Shareholder’s A/c
(Interest due on Calls in Advance)
For Interest Paid-
Sundry Shareholder’s A/c Dr.
To Bank A/c
(Interest paid) | 
