Which account is debited when a shareholder pays calls in arrears together with interest?

Bank Account

The correct answer is option 1- Bank Account.

When a shareholder pays calls in arrears together with interest, the shareholder is making a payment to the company. This payment is usually made through a bank transaction. Therefore, the "Bank Account" is debited, as it represents the inflow of cash into the company's bank account. This entry reflects the increase in the company's cash assets due to the payment received from the shareholder. The journal entry for this will be-

Bank A/c                              Dr.      [Total amount received]
   To Calls in Arrears A/c                       [Call money due]
   To Interest on Calls in Arrears A/c           [Interest received]