Question

A company issues the following debentures:

1. 10,000, 12% debentures of ₹ 100 each at par but redeemable at a premium of 5% after 5 years;
2. 10,000, 12% debentures of ₹ 100 each at a discount of 5%, but redeemable at a premium of 5% after 5 years;
3. 5,000, 12% debentures of ₹ 100 each at a premium of 10% but redeemable at par after 5 years;
4. 1,000, 14% debentures of ₹ 100 each issued to a supplier of machinery costing ₹ 95,000, the debentures are repayable after 5 years; and
5. 300, 13% debentures of ₹ 100 each as a collateral security to a bank who has advanced a loan of ₹ 25,000 to the company for a period of 5 years. 

Pass the Journal entries to record the issue of debentures.

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
a.	Bank A/c   ...Dr.		10,00,000	-
	To 12% Debentures A/c   ...Dr.		-	10,00,000
	(Being debentures issued at par)
b.	Bank A/c   ...Dr.		9,50,000	-
	Discount on Issue of Debentures A/c   ...Dr.		50,000	-
	To 12% Debentures A/c		-	10,00,000
	(Being debentures issued at 5% discount)
c.	Bank A/c   ...Dr.		5,50,000	-
	To 12% Debentures A/c		-	5,00,000
	To Securities Premium A/c		-	50,000
	(Being debentures issued at 10% premium)
d.	Machinery A/c   ...Dr.		95,000	-
	Discount on Issue of Debentures A/c   ...Dr.		5,000	-
	To 14% Debentures A/c		-	1,00,000
	(Being machinery purchased by issue of debentures at discount)
e.	Bank A/c   ...Dr.		25,000	-
	To Bank Loan A/c		-	25,000
	(Being loan received from bank)