What is the journal entry for calls in advance?

Journal Entry for Calls in Advance 

Calls in advance mean excess money received by the company than what has been called up. Calls in advance are treated as Current Liability and shown in the Balance Sheet on the liability side.

Journal Entry will be :

Here we will “Debit” Bank A/c as it will increase assets of the company and “Credit” Calls in Advance A/c because it will increase the company’s current liabilties.

For Example:

Mr.Z shareholder of ABC Ltd was allotted 2,000 equity shares of Rs.10 each. He paid call money at the time of allotment.

Journal Entry is as follows:

Here, the company received an excess amount of Rs.6,000 (2,000*3) from a shareholder Mr.Z who paid the call money in advance. ABC Ltd will record this under Calls in Advance A/c. While passing journal entry ABC Ltd will debit its Bank A/c by Rs.6,000 and credit calls in advance account by Rs.6,000.

When share calls are called up, calls received in advance are adjusted. The company will hold only the required amount which will make allotted shares fully paid.

Once the amount is transferred to relevant call accounts, calls in advance account will be written off.