Question

A. Ltd. issued 10,000, 10% Debentures of Rs 100 each at a premium of 5% payable as follows:

Rs 10 on Application;

Rs 20 along with premium on allotment and balance on First and Final call. The debentures were fully subscribed, and all money was duly received. Record necessary Journal entries. Also, show how the amount will appear in the balance sheet.

Answer 1

Books of A. Ltd.

Journal

Date	Particulars			L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c		Dr.		1,00,000
		To 10% Debentures Application A/c				1,00,000
	(Application money received for 10,000, 10% Debenture Application @ Rs 10 each)
	10% Debentures Application A/c		Dr.		1,00,000
		To 10% Debenture A/c				1,00,000
	(Application money @ Rs 10 each transferred to 10% Debenture Account)
	10% Debenture Allotment A/c		Dr.		2,50,000
		To 10% Debentures A/c				2,00,000
		To Securities Premium A/c				50,000
	(Allotment due @ Rs 25 each including premium Rs 5 on 10,000, 10% Debentures)
	Bank A/c		Dr.		2,50,000
		To 10% Debenture Allotment A/c				2,50,000
	(Allotment money received on allotment @ Rs 25 each for 10,000 10% Debentures)
	10% Debenture First and Final Call A/c		Dr.		7,00,000
		To 10% Debenture A/c				7,00,000
	(First and Final Call @ Rs 70 each on 10,000 10% Debentures due)
	Bank A/c		Dr.		7,00,000
		To 10% Debenture First and Final Call A/c				7,00,000
	(Debenture First and Final Call received @ Rs 70 each for 10,000 10% Debentures)

Balance Sheet of A. Ltd. (Extract)

Particulars	Note No.	Amount (₹)
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Reserves and Surplus	1	50,000
2. Non-Current Liabilities
(a) Long-term Borrowings	2	10,000,00
Total		10,50,000
II. ASSETS
1. Current Assets
(a) Cash and Cash Equivalents	3	10,50,000
Total		10,50,000

Notes to Accounts:

1. Reserves and Surplus:

Securities Premium Reserve = ₹ 50,000

2. Long-term Borrowings:

10,000, 10% Debentures of ₹ 100 each = ₹ 10,00,000

3. Cash and Cash Equivalents:

Cash at Bank (1,00,000 + 2,50,000 + 7,00,000) = 10,50,000