Practicing Success
Sometimes shareholders pay a part or the whole of the amount of calls not yet made. The amount so received from shareholders is: |
Credited to Share Allotment Account Credited to first call Account Debited to calls in Advance Account Credited to calls in Advance Account |
Credited to calls in Advance Account |
The correct answer is option (4) : Credited to calls in Advance Account. Calls in Advance Account is the appropriate account for recording the amount received from shareholders for calls that haven't been formally made yet. It represents a liability for the company, as the shareholders have essentially paid ahead of the official call. The journal entry for this- |