AccountsISC Class 12 · Issue of Shares

Calls in Arrears and Calls in Advance: ISC Class 12 Accounts

Updated 16 October 2026 · Fact-checked

Calls in arrears is allotment or call money due but not paid; calls in advance is money received before a call is made. Under Table F, interest is up to 10% p.a. on arrears and up to 12% p.a. on advance. Arrears are deducted from share capital; advance is a current liability.

Understand Calls in Arrears and Calls in Advance

Calls in Arrears. When a shareholder does not pay allotment or call money by the due date, the unpaid amount is transferred to a Calls in Arrears A/c. The CISCE syllabus requires this account to be used: Calls in Arrears A/c Dr; To Share Allotment (or Call) A/c. When the money is received later: Bank A/c Dr; To Calls in Arrears A/c.

Interest on Calls in Arrears is charged only if the Articles provide for it; Table F of the Companies Act, 2013 allows up to 10% p.a. from the due date to the date of payment. ISC examiners in 2024 noted candidates unable to calculate this interest and omitting its closing entry. The usual entries:

Sundry Members (Shareholders) A/c Dr; To Interest on Calls in Arrears A/c (interest due).
Bank A/c Dr; To Sundry Members A/c (received).
Interest on Calls in Arrears A/c Dr; To Statement of Profit and Loss (closing; it is an income).

Calls in Advance. Money received before a call is made is credited to Calls in Advance: Bank Dr; To Calls in Advance. When the call is made: Calls in Advance Dr; To Share Call. Until then it is shown under Other Current Liabilities, not under Share Capital.

Interest on Calls in Advance is paid, if the Articles allow, up to 12% p.a. under Table F, from the date received to the date the call falls due. It is an expense (finance cost), payable even if there is no profit:

Interest on Calls in Advance Dr; To Sundry Members A/c; then Sundry Members Dr; To Bank; closing: Statement of Profit and Loss Dr; To Interest on Calls in Advance.

Disclosure. In the Notes to Accounts for Share Capital: Subscribed and fully paid; Subscribed but not fully paid, less Calls in Arrears; then Shares Forfeited A/c. Equity and preference capital are shown separately.

Calls in Arrears and Calls in Advance: key facts

Interest on calls in arrears: Amount in arrears × Rate (Table F: up to 10% p.a.) × Months from due date to payment ÷ 12; Only if the Articles provide.
Interest on calls in advance: Amount in advance × Rate (Table F: up to 12% p.a.) × Months from receipt to call due date ÷ 12; An expense, even without profit.
Cash received on a call: Call due − Calls in arrears − Calls in advance already received for that call
Subscribed but not fully paid: Shares × Amount called up − Calls in Arrears; Shown in Notes to Accounts.
Where they appear: Calls in arrears: deducted in Share Capital note | Calls in advance: Other Current Liabilities

How to answer Calls in Arrears and Calls in Advance questions

ISC share questions often add one defaulter and one early payer. Track both through allotment, call and interest.

1Note each due date; interest depends on months.
2On the due date, raise the full amount due; credit cash received; debit Calls in Arrears with the shortfall.
3Credit any early payment to Calls in Advance and adjust it when the call is made.
4Calculate interest for the exact months at the stated or Table F rate.
5Pass the due, receipt and closing entries for each interest.
6Show arrears as a deduction in the Share Capital note and advance under Other Current Liabilities.

Calls in Arrears and Calls in Advance in real life

The idea, met in an everyday situation. Answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Interest for paying late

Suppose a housing society asks each member to pay ₹6,000 towards repairs by 1 January, with interest at 10% p.a. on late payment. One member pays on 1 March.

How much interest should the member pay?

Try it first, then show the solutionSolution

Months late = 2.
Interest = 6,000 × 10% × 2/12 = ₹100.

Answer: The member pays ₹100 interest, just as a company charges interest on calls in arrears.

Memory hook: Late pays ten; early earns twelve.

Tricks to remember Calls in Arrears and Calls in Advance

Short memory aids. Say each one aloud once, then use it on a question the same day.

Late 10, early 12
Table F: interest on arrears up to 10%; on advance up to 12%.
Use it when: When the Articles are silent on the rate.
Arrears less, advance liability
Arrears reduce share capital in the note; advance sits with other current liabilities.
Use it when: Balance Sheet disclosure.
Due, receive, close
Every interest needs three entries: when due, when received or paid, and the closing entry to P&L.
Use it when: Avoiding the missing closing entry.

Calls in Arrears and Calls in Advance: solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: Table F rate on calls in advance · 1 mark · MCQBoard level

If the Articles of a company are silent and it adopts Table F, the maximum rate of interest payable on calls in advance is:
(a) 6% p.a.
(b) 10% p.a.
(c) 12% p.a.
(d) 15% p.a.

Try it first, then show the solutionSolution

Table F sets 10% for arrears and 12% for advance.
Advance is the shareholder's favour to the company, so the higher rate is paid.

Answer: (c) 12% p.a.

Example 2: Interest on allotment in arrears · 3 marks · Short answerBoard level

Allotment money of ₹4 per share was due on 1 June. A holder of 300 shares paid it on 30 September with interest at 10% p.a. Pass the entries for arrears and calculate the interest. (3 marks)

Try it first, then show the solutionSolution

Calls in Arrears A/c Dr 1,200; To Share Allotment A/c 1,200 (on 1 June).
Interest = 1,200 × 10% × 4/12 = ₹40.
Bank Dr 1,240; To Calls in Arrears 1,200; To Sundry Members (interest) 40, after raising the interest due.

Answer: Calls in arrears ₹1,200; interest ₹40; ₹1,240 received on 30 September.

Example 3: Interest on calls in advance · 3 marks · Short answerHarder board level

A holder of 500 shares paid the first call of ₹3 per share along with allotment on 1 May. The call was made on 1 November. The company pays 12% p.a. on calls in advance. Calculate the interest and give the closing entry. (3 marks)

Try it first, then show the solutionSolution

Advance = 500 × 3 = ₹1,500.
Interest = 1,500 × 12% × 6/12 = ₹90.
Closing: Statement of Profit and Loss Dr 90; To Interest on Calls in Advance 90.

Answer: Interest ₹90, an expense closed to the Statement of Profit and Loss.

Example 4: One defaulter and one early payer · 6 marks · Long answerHarder board level

Cedar Ltd issued 20,000 shares of ₹10: ₹3 on application, ₹3 on allotment (due 1 July 2025) and ₹4 on first and final call (due 1 January 2026). A holder of 400 shares paid allotment on 30 September 2025; a holder of 600 shares paid the call with allotment on 1 July. Interest: 10% p.a. on arrears, 12% p.a. on advance. Calculate cash received on 1 July, the interest on arrears and on advance, and cash received on the call. (6 marks)

Try it first, then show the solutionSolution

Allotment due 60,000; arrears 400 × 3 = 1,200; advance 600 × 4 = 2,400.
Cash on 1 July = 60,000 − 1,200 + 2,400 = ₹61,200.
Interest on arrears = 1,200 × 10% × 3/12 = ₹30 (received with ₹1,200 on 30 September).
Interest on advance = 2,400 × 12% × 6/12 = ₹144.
Call due 80,000; Calls in Advance Dr 2,400; cash on call = ₹77,600.

Answer: ₹61,200 on 1 July; interest ₹30 on arrears and ₹144 on advance; ₹77,600 on the call.

Example 5: Disclosure with arrears and advance · 6 marks · Long answerHOTS / competency

Pine Ltd has 50,000 equity shares of ₹10 each, ₹7 called up; the final call of ₹3 has not been made. Holders of 1,000 shares have not paid the second call of ₹2. A holder of 500 shares has paid the final call in advance. Show the relevant extract of the Share Capital note and where the advance is shown. (6 marks)

Try it first, then show the solutionSolution

No share is fully paid, since ₹3 is still uncalled.
Subscribed but not fully paid: 50,000 × 7 = 3,50,000; less Calls in Arrears 2,000 = ₹3,48,000.
Calls in Advance 500 × 3 = ₹1,500: Current Liabilities → Other Current Liabilities; not in Share Capital.

Answer: Share Capital note: Subscribed but not fully paid ₹3,50,000 less Calls in Arrears ₹2,000 = ₹3,48,000. Calls in Advance ₹1,500 under Other Current Liabilities.

Example 6: Working back from arrears · 3 marks · Short answerHOTS / competency

Allotment money is ₹5 per share including a premium of ₹2. The Calls in Arrears A/c shows ₹3,500 for allotment. Find the number of shares and split the arrears between share capital and premium. (3 marks)

Try it first, then show the solutionSolution

Shares = 3,500 ÷ 5 = 700.
Capital = 700 × 3 = ₹2,100; premium = 700 × 2 = ₹1,400.

Answer: 700 shares; arrears split ₹2,100 capital and ₹1,400 premium.

Where students lose marks in Calls in Arrears and Calls in Advance

The slips examiners see most often, and what to write instead.

Mistake: Missing the closing entry for interest
Stopping after the receipt.
Wrong working
Interest on Calls in Arrears left open
Right working
Interest on Calls in Arrears Dr; To Statement of P&L
Do this: ISC examiners in 2024 reported this omission.
Usually costs: 1 mark.
Mistake: Interest for a full year
Ignoring due and payment dates.
Wrong working
1,200 × 10% = 120
Right working
1,200 × 10% × 3/12 = 30
Do this: Count months between the two dates.
Usually costs: 1 mark.
Mistake: Calls in advance under Share Capital
Thinking it is part of paid-up capital.
Wrong working
Share Capital + Calls in Advance 1,500
Right working
Other Current Liabilities: Calls in Advance 1,500
Do this: No call has been made, so it is not capital yet.
Usually costs: 1 mark.
Mistake: Writing expressions instead of amounts
Saving time in entries.
Wrong working
Calls in Arrears Dr 400 × 3
Right working
Calls in Arrears Dr 1,200
Do this: ISC examiners in 2024 asked for amounts, not expressions.
Usually costs: Up to 1 mark.

Exam tips

State the rate source: 'as per Articles' or 'Table F'.
Show months in the interest working: '× 4/12'.
Adjust calls in advance before calculating cash received on the call.
Show equity and preference capital separately in the note.

Practice questions on Calls in Arrears and Calls in Advance

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

Q1 · 1 mark · MCQBoard level
In the company Balance Sheet, Calls in Advance are shown under:
(a) Share Capital
(b) Reserves and Surplus
(c) Other Current Liabilities
(d) Long-term Borrowings
Hint
The call has not been made.
Answer
(c) Other Current Liabilities
Q2 · 1 mark · MCQBoard level
Calls in Arrears are shown in the Notes to Accounts as:
(a) an addition to subscribed capital
(b) a deduction from subscribed but not fully paid capital
(c) a current asset
(d) a reserve
Hint
Called but not received.
Answer
(b) a deduction from subscribed but not fully paid capital
Q3 · 3 marks · Short answerBoard level
A call of ₹2 per share on 900 shares was due on 1 December and paid on 31 March, with interest at 10% p.a. Calculate the interest. (3 marks)
Hint
Four months.
Answer
1,800 × 10% × 4/12 = ₹60.
Q4 · 3 marks · Short answerHarder board level
A final call of ₹2.50 per share on 1,000 shares was received three months before it was made. Interest is paid at 12% p.a. Calculate the interest. (3 marks)
Hint
Advance ₹2,500.
Answer
2,500 × 12% × 3/12 = ₹75.
Q5 · 3 marks · Short answerHarder board level
Pass the three entries for interest of ₹60 on calls in arrears: when due, when received and at closing. (3 marks)
Hint
Members, Bank, P&L.
Answer
Sundry Members Dr 60; To Interest on Calls in Arrears 60. Bank Dr 60; To Sundry Members 60. Interest on Calls in Arrears Dr 60; To Statement of Profit and Loss 60.
Q6 · 1 mark · Assertion-reasonHarder board level
Assertion (A): Interest on calls in advance is payable even if the company has no profit.
Reason (R): It is a charge against profit, not an appropriation of profit.
(a) Both A and R are true, and R is the correct explanation of A.
(b) Both A and R are true, but R is not the correct explanation of A.
(c) A is true, but R is false.
(d) A is false, but R is true.
Hint
Like interest on a loan.
Answer
(a) Both A and R are true, and R is the correct explanation of A.
Q7 · 6 marks · Long answerHarder board level
A first call of ₹3 per share was made on 30,000 shares. Holders of 500 shares did not pay. Holders of 800 shares had already paid this call in advance with allotment. Calculate the cash received on the call. (6 marks)
Hint
Deduct both arrears and the earlier advance.
Answer
90,000 − 1,500 − 2,400 = ₹86,100.
Q8 · 3 marks · Short answerHarder board level
Allotment of ₹4 per share was due on 40,000 shares. Cash received on allotment was ₹1,58,800, including ₹2,000 paid in advance for the first call. Find the calls in arrears and the number of defaulting shares. (3 marks)
Hint
Due + advance − received.
Answer
Arrears = 1,60,000 + 2,000 − 1,58,800 = ₹3,200, on 800 shares.
Q9 · 6 marks · Long answerHOTS / competency
A holder of 500 shares did not pay allotment of ₹3 (due 1 August) or the call of ₹3 (due 1 December). He paid both on 31 March with interest at 10% p.a. Calculate the interest on each and the total he paid. (6 marks)
Hint
Eight months and four months.
Answer
Allotment 1,500 × 10% × 8/12 = ₹100; call 1,500 × 10% × 4/12 = ₹50; total paid ₹3,150.
Q10 · 3 marks · Short answerHOTS / competency
40,000 equity shares of ₹10 are fully called. Holders of 400 shares have not paid the final call; calls in arrears are ₹1,200. Prepare the subscribed capital part of the Share Capital note. (3 marks)
Hint
Two lines: fully paid and not fully paid.
Answer
Subscribed and fully paid: 39,600 × 10 = ₹3,96,000. Subscribed but not fully paid: 400 × 10 = 4,000 less arrears 1,200 = ₹2,800. Total ₹3,98,800.

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1.Table F maximum interest on calls in arrears?Show answer
10% p.a.
2.Is interest on calls in arrears an income or expense?Show answer
Income.
3.Calls in advance: which account is debited when the call is made?Show answer
Calls in Advance A/c.
4.₹1,000 in arrears for 6 months at 10%: interest?Show answer
₹50.
5.Must the Calls in Arrears A/c be used in ISC answers?Show answer
Yes, the syllabus requires it.

Calls in Arrears and Calls in Advance: frequently asked questions

Can a company refuse to accept calls in advance?

It accepts them only if its Articles permit; the question will say so.

What happens if arrears are never paid?

The directors may forfeit the shares; the arrears are then cancelled through the forfeiture entry.

Does a shareholder with calls in advance get extra dividend?

No. He receives interest on the advance, not dividend on it.

Why is 'Sundry Members A/c' used for interest?

It records the amount due from or to shareholders before cash moves, keeping the interest entry separate from the receipt or payment.