Calls in arrears and calls in advance

Not every shareholder pays on time, and some pay early.

Calls in arrears: money due on allotment or a call that has not been paid. The company may open a Calls in Arrears Account, though it does not have to: Calls in Arrears Dr. To the call account. In the share capital note, calls in arrears are deducted from called-up capital. Under Table F, the company may charge interest on them at up to 10% a year, from the date they fell due.

Calls in advance: money paid before the company has called it. Bank Dr. To Calls in Advance. It is not yet capital: it is shown as a liability (under other current liabilities). When the call is finally made, it is used up: Calls in Advance Dr. To the call account. The company pays interest on it at up to 12% a year (Table F).

Note the difference: on arrears the company charges interest (up to 10%); on advances it pays interest (up to 12%).

Example: a first call of ₹2 is made on 5,000 shares. Holders of 200 shares do not pay; holders of another 100 shares also pay the final call of ₹3 in advance. Bank = 4,800 × 2 + 100 × 3 = 9,600 + 300 = 9,900; arrears 400; advance 300.