Question

A. Ltd. issued 50,00,000, 8% debentures of Rs. 100 at a discount of 6% on April 01, 2018, redeemable at a premium of 4% by draw of lots as under:

20,00,000 debentures on March, 2020

10,00,000 debentures on March, 2021

20,00,000 debentures on March, 2022

Record journal entries for the issue of debentures. Prepare discount/loss on issue of debenture account.

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2018
Apr 01	Bank A/c   ...Dr.		47,00,000	-
	To Debenture Application & Allotment A/c		-	47,00,000
	(Being application money received on 50,000 debentures @ Rs. 94 each)
Apr 01	Debenture Application & Allotment A/c   ...Dr.		47,00,000	-
	Loss on Issue of Debentures A/c   ...Dr.		5,00,000	-
	To 8% Debentures A/c		-	50,00,000
	To Premium on Redemption of Debentures A/c		-	2,00,000
	(Being allotment of debentures issued at a 6% discount and redeemable at a 4% premium)

Loss Writing-Off Statement:

Year	Period	Outstanding Nominal Value (₹)	Ratio	Amount to be Written Off (₹)
1	2018 – 19	50,00,000	5	`5,00,000 xx 5/15` = 1,66,667
2	2019 – 20	50,00,000	5	`5,00,000 xx 5/15` = 1,66,667
3	2020 – 21	30,00,000	3	`5,00,000 xx 3/15` = 1,00,000
4	2021 – 22	20,00,000	2	`5,00,000 xx 2/15` = 66,666
	Total		15	5,00,000

 

Dr.	Loss on Issue of Debentures Account				Cr.
Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
2018			2019
Apr 01	To 8% Debentures A/c	3,00,000	Mar 31	By Statement of Profit & Loss	1,66,667
Apr 01	To Premium on Redemption A/c	2,00,000	Mar 31	By Balance c/d	3,33,333
	Total	5,00,000		Total	5,00,000
2019			2020
Apr 01	To Balance b/d	3,33,333	Mar 31	By Statement of Profit & Loss	1,66,667
			Mar 31	By Balance c/d	1,66,666
	Total	3,33,333		Total	3,33,333
2020			2021
Apr 01	To Balance b/d	1,66,666	Mar 31	By Statement of Profit & Loss	1,00,000
			Mar 31	By Balance c/d	66,666
	Total	1,66,666		Total	1,66,666
2021			2022
Apr 01	To Balance b/d	66,666	Mar 31	By Statement of Profit & Loss	66,666
	Total	66,666		Total	66,666