The document discusses pro-rata allotment of shares, calls in arrears, and calls in advance. For pro-rata allotment, shares are allotted to applicants in proportion to the number applied for when a public issue is oversubscribed. Calls in arrears refers to amounts not paid by shareholders when called. There are two methods to account for calls in arrears, with or without an arrears account. Calls in advance occur when shareholders pay more than required at allotment, with the excess treated as a debt until needed for subsequent calls. Sample journal entries are provided for related share allotment scenarios.

1. Pro-rata Allotment, Calls in
Arrears, Calls in Advance
- Corporate Accounting
- Pulkit Choudhary

2. Pro-rata Allotment
 In the case of over-subscription, it is not possible for the company to allot shares to
every applicant in the number that he desires. The company needs to allot the
shares in a proper manner. The company has the following three alternatives:
1. Accept some applications in full and reject the others totally.
2. Make Pro-Rata Allotment.
3. Adopt a combination of the above two.
 Usually, the company does not consider the multiple applications from the same
person. Also, generally a company takes the third course of action. The problem of
accounting of over-subscription is usually resolved at the time of allotment of shares.
 Pro-rata allotment refers to the allotment of shares in proportion of the shares applied
for. When a company makes pro-rata allotment, it adjusts the excess money received
at the time of application firstly, towards the allotment and then towards calls.

3. Calls in Arrears
Proportion of called-up capital not paid by the
shareholders.
 Two alternative method
 Without opening call-in-arrear account.
Accounting Treatment: Amount of call-in-arrear will be shown as a
deduction from total amount due.
 By opening call-in-arrear account.
Accounting Treatment: We transfer the unpaid amount to Calls-In-
Arrears Account.

4. Question
 Ram and company was floated with an authorised
capital consisting of 10,000 shares of 10 each. The
amount is payable as 4 on application, 3 on allotment, 2
on first call and 1 on final call. All shares were offered to
the public for subscription. Applications were received for
all the shares and all were accepted. All money was duly
received except a holder of 200 shares who failed to pay
calls.

5. Journal Entries

6. .

7. Calls in advance
 The company treats calls-in-advance as a debt of until it makes the
calls. The amount already paid is adjusted. Calls-in-advance may
also arise when the number of shares allotted to a person is much
smaller than the number applied by him for and the terms of issue
allow the company to retain the amount received in excess of
application and allotment money.
 The company can retain only such amount as is required to make
the allotted shares fully paid. After transferring the amount to the
relevant call accounts, the company closes the calls-in-advance
account. It shows this amount under a separate heading, namely
‘calls-in-advance’ on the liabilities side.

8. Question
 Ram and company was floated with an authorised
capital consisting of 10,000 shares of ₹10 each. The
amount is payable as ₹4 on application, ₹3 on allotment,
2 on first call and 1 on final call. All shares were offered
to the public for subscription. Applications were received
for all the shares and all were accepted. One
shareholder to whom 200 shares were allotted paid all
the money at the time of allotment.

9. Journal entries

10. .

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