Question

A company issues the following debentures:

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

Pass the journal entries to record the repayment of debentures.

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
(i)
1.	12% Debenture A/c   .....Dr.		10,00,000	-
	Premium on Redemption of Debenture A/c   .....Dr.		50,000	-
	To Debenture Holders A/c		-	10,50,000
	(Being amount due on redemption at premium.)
2.	Debenture Holders A/c   .....Dr.		10,50,000	-
	To Bank A/c		-	10,50,000
	(Being payment made to debenture holders.)
(ii)
1.	12% Debenture A/c   .....Dr.		10,00,000	-
	To Debenture Holders A/c		-	10,00,000
	(Being debentures redeemed.)
2.	Debenture Holders A/c   .....Dr.		10,00,000	-
	To Bank A/c		-	10,00,000
	(Being payment made to debenture holders.)
(iii)
1.	12% Debenture A/c   .....Dr.		50,00,000	-
	To Debenture Holders A/c		-	50,00,000
	(Being redemption of debentures.)
2.	Debenture Holders A/c   .....Dr.		50,00,000	-
	To Bank A/c		-	50,00,000
	(Being payment made to debenture holders.)
(iv)
1.	12% Debenture A/c   .....Dr.		1,00,000	-
	To Vendor A/c		-	1,00,000
	(Being debentures issued to vendor.)
2.	Vendor A/c   .....Dr.		1,00,000	-
	To Bank A/c		-	1,00,000
	(Being payment made to vendor.)
(v)
1.	12% Debenture A/c   .....Dr.		30,000	-
	To Debenture Suspense A/c		-	30,000
	(Being collateral security debentures cancelled.)