Question

Meghnath Limited took a loan of Rs. 1,20,000 from a bank and deposited 1,400, 8% debentures of Rs. 100 each as collateral security along with primary security worth Rs. 2 lakh. The company again took a loan of Rs. 80,000 after two months from a bank and deposited 1,000, 8% debentures of Rs. 100 each as collateral security. Record necessary journal entries and prepare the balance sheet of the company.

Answer 1

Journal of Meghnath Limited
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c   ...Dr.		1,20,000	-
	To Bank Loan A/c		-	1,20,000
	(Being a bank loan of Rs. 1,20,000 raised against primary security)
2.	Debenture Suspense A/c   ...Dr.		1,40,000	-
	To 8% Debentures A/c		-	1,40,000
	(Being 1,400, 8% debentures of Rs. 100 each issued as collateral security)
3.	Bank A/c   ...Dr.		80,000	-
	To Bank Loan A/c		-	80,000
	(Being a second bank loan of Rs. 80,000 raised)
4.	Debenture Suspense A/c   ...Dr.		1,00,000	-
	To 8% Debentures A/c		-	1,00,000
	(Being 1,000, 8% debentures of Rs. 100 each issued as collateral security)

 

Balance Sheet of Meghnath Limited (Extract)
Particulars	Note No.	Amount (₹)
I. EQUITY AND LIABILITIES
1. Non-Current Liabilities
(a) Long-term borrowings	1	2,00,000
Total		2,00,000
II. ASSETS
1. Current Assets
(a) Cash and cash equivalents (Bank)	2	2,00,000
Total		2,00,000

Notes to Accounts

Note No.	Particulars	Amount (₹)	Amount (₹)
1	Long-term Borrowings
	Bank Loan (Secured by primary security and collateral issue of Rs. 2,40,000 debentures)		2,00,000
	8% Debentures	2,40,000
	Less: Debenture Suspense A/c	(2,40,000)	Nil
	Total Long-term Borrowings		2,00,000
2	Cash and Cash Equivalents
	Cash at Bank (1,20,000 + 80,00,000)		2,00,000