Accounting: Issue of Shares: At Discount, Call-In-Advance and Call-In-Areas (For CBSE, ICSE, IAS, NET, NRA 2022)

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When shares are issued at less than the face value they called as discount shares.

Discount = face value – issue price

As per Companies Act, 1956 sec 79 conditions for issuing shares at discount

  • At least one year must have elapsed from the date of commencement of business.
  • Such shares are of the same class as had already been issued.
  • The company has sanctioned such issue by passing a resolution in its General meeting and the approval of the court is obtained.
  • Discount could be a maximum of 10 % of face value. To give more discount company should get approval from central government
    Journal Entry for Issue of Shares at Discount

Call-In-Advance and Call-In-Arrears

  • Sometimes shareholder pays amount to the company before it is demanded, and this amount will be recorded in separate account called Call-in-advance A/c. This will not be shown as company՚s capital and it is on liability side in Balance sheet. Applicant is entitled to get interest on amount paid in advance at 6 % p. a till the date of its appropriation.
  • Company sends notice to the shareholders to pay allotment and/or call money in a stipulated time period. If applicant failed to pay it will be treated as arrears due and recorded in Call-in-arrears A/c. The applicant is supposed to pay interest on arrears at 5 % p. a for the intervening period (The period between date of non-receipt of the due amount and the date of actual receipt of the due amount) .


ABC Ltd issued 20000 shares of ₹ 10 each payable as ₹ 2 per share on application, ₹ 5 (including premium of ₹ 2 per share) on allotment, ₹ 3 per share on first call and the balance on Final Call.

All the money was received except the first call money on 400 shares, which was received later on with final call.

Make necessary journal entries.


Journal Entries

Table of Journal Entries
S. NoParticularsL. FAmount (₹)
1.Bank A/c Dr.

To Share Application A/c

(Applications for 20000 shares @ ₹ 2 per share)

2.Share Application A/c Dr.

To Share Capital A/c

(application money transferred to share capital A/c)

3.Share Allotment A/c Dr.

To Share Capital A/c

To Securities Premium A/c

(Allotment money due @ ₹ 5 (3 + 2) per share)



4.Bank A/c Dr.

To Share Allotment A/c.

(Allotment money received)

5.Share First A/c Dr.

To Share Capital A/c.

(Call money due 20000 shares@3 per share)

6.Bank A/c Dr.

Call-in-arrears A/c Dr.

To Share First call A/c

(money received on 19600 shares@ ₹ 3 per share)



7Share Final Call A/c Dr.

To Share Capital A/c.

(Call money due 20000 shares@2 per share)

8Bank A/c Dr.

To Share First call A/c

To Call-in-arrears A/c

(20000 shares @ ₹ 2 per share along with arrears of first call on 400 shares)



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