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CA Intermediate · Advanced Accounting · Financial Statements of Companies

Rao Textiles Ltd has an authorised capital of ₹5,00,000. It issued 20,000 equity shares of ₹10 each, all subscribed, and the full ₹10 per share was called up. The calls-in-arrear on the shares total ₹15,000, and no amount has been received in advance. What amount of paid-up equity share capital will be shown in the Balance Sheet?

The paid-up equity share capital is ₹1,85,000. Called-up capital of ₹2,00,000 is reduced by the ₹15,000 of calls in arrear, because that amount has not actually been received from shareholders and so cannot be treated as paid up.

  1. A₹2,00,000
  2. B₹2,15,000
  3. C₹1,85,000Correct
  4. D₹1,70,000

Explanation

Called-up capital is 20,000 × ₹10 = ₹2,00,000. Calls in arrear are not yet received, so they are deducted to arrive at paid-up capital: ₹2,00,000 − ₹15,000 = ₹1,85,000. Showing ₹2,00,000 ignores the arrears, while adding them (₹2,15,000) has the wrong sign.

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