Question

India Ltd. made the following issue of 6% debentures:

1. For cash at 90%, 6,000 debentures of ₹ 100 each.
2. 1,100 debentures of ₹ 100 each to a creditor regarding machinery costing ₹ 1,00,000.
3. To bank for a loan of ₹ 7,00,000 as collateral security, 10,000 debentures of ₹ 100 each.

Prepare necessary entries, ignoring writing off discount on issue of debentures.

Answer 1

In the books of India Ltd.
Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c    ...Dr.		5,40,000	-
	Discount on Issue of Debentures A/c    ...Dr.		60,000	-
	To 6% Debenture A/c (6000 × 100)		-	6,00,000
	(Being 6,000 debentures of ₹100 each issued for cash at a discount of 10%)
2.	Machinery A/c    ...Dr.		1,00,000	-
	Discount on Issue of Debenture A/c    ...Dr.		10,000	-
	To 6% Debenture A/c		-	1,10,000
	(Being 1,100 debentures of ₹100 each issued to a creditor for machinery costing ₹1,00,000)
3.	Bank A/c    ...Dr.		7,00,000	-
	To Bank loan A/c		-	7,00,000
	(Bank loan received; 10,000 6% debentures lodged as collateral.)