In the past, companies typically issued shares payable by installments. These installments were Application, Allotment, First Call, Second Call, and Final Call.

If there is only one call, it is not referred to as the First Call. The words “first,” “second,” and “final” are only used when there is more than one call.

When shares are issued payable by installments, the amount due for each installment may be debited to the shareholders’ account. However, by doing so, no distinction will be made between the various installments.

Therefore a separate account is opened for each installment when it becomes due (e.g., Application, Allotment, First Call, Second Call, and Final Call).

It is worth remembering that these accounts replace the shareholders’ accounts. The amount payable on the application of each share will be the full nominal amount of the shares.

Therefore, accounting entries for the issuance of shares, when payable by installments, have not been explained.


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