A company maintains 'Calls in Arrears' Account. What entry will it be passed on receiving first call money provided whole amount due in it is not received?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Bank A/c Dr., Calls in Arrears A/c Dr., To Share First Call A/c
When a company keeps a Calls in Arrears Account, the unpaid part of a call is moved out of the call account into it. On receiving the first call money, the whole amount due is credited to Share First Call Account; the part received is debited to Bank and the part not received is debited to Calls in Arrears Account:
Bank A/c Dr. (amount received)
Calls in Arrears A/c Dr. (amount not received)
To Share First Call A/c (total amount due)
This one entry joins the receipt of the call money with the transfer of the unpaid part to Calls in Arrears Account (Calls in Arrears A/c Dr., To Share First Call A/c).
NCERT (2026-27 edition): |