High Light India Ltd. invited applications for 30,000 shares of ₹100 each at a premium of ₹ 20 per share payable as follows:
| On Applications | ₹40 (including ₹10 premium) |
| On Allotment | ₹30 (including ₹10 premium) |
| On First Call | ₹30 |
| On Second and Final Call | ₹20 |
Applications were received for 40,000 shares and pro-rata allotment was made to the applicants for 35,000 shares. Excess application money was utilised towards allotment.
Rohan to whom 600 shares were allotted failed to pay the allotment money and his shares were forfeited immediately after allotment.
Aman who applied for 1,050 shares failed to pay first call and his shares were forfeited immediately after first call.
Second and final call was made. All the money due on second call has been received.
Of the shares forfeited 1,000 shares were reissued as fully paid-up for ₹80 per share, which include the whole of Aman's shares.
Answer the question on the basis of the information given.
Which Account will be debited to record default on payment of any call?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Calls in Arrear
When a shareholder does not pay the allotment or a call money, the unpaid amount is Calls in Arrears. Where the company keeps this account, it is debited and the call account concerned is credited.
Option (1) Calls in Advance — Incorrect. This is money received before it is called; it is credited, as a liability.
Option (3) Forfeited Shares — Incorrect. It is credited only when the shares are forfeited, with the amount already received.
Option (4) Capital Reserve — Incorrect. It receives capital profits, such as the gain on reissue of forfeited shares.
NCERT (2026-27 edition): |