Question

Mint Ltd. issued 5,000, 6% Debentures of ₹ 100 each to be redeemed at par after five years.

The issue price was payable as follows:

₹ 25 on Application payable on 1st May 2023
₹ 25 on Allotment payable on 1st July 2023
₹ 20 on First Call payable on 1st October 2023

Balance on Second & Final Call payable on 1st February 2024

All these debentures were subscribed and amounts due on them duly received.
One debenture holder holding 1,000 debentures, paid the amount of both the calls with allotment.
According to the Articles of Association of the company, interest @ 12% per annum is payable on calls-in-advance. The interest on calls-in-advance was paid by the company to the debenture holder on 1st February 2024.
The company follows the financial year and closes its books accordingly.

You are required to prepare the following for the year 2023-24:

1. Interest on Calls-in-Advance Account.
2. Second & Final Call Account.

Answer 1

Dr.	In the Books of Mint Limited Interest on Calls in Advance A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Debenture holder’s A/c	2,700	By P&L A/c	2,700
	2,700		2,700

 

Dr.	Second and Final Call A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Debenture Capital A/c	1,50,000	By Bank A/c	1,20,000
		By Calls in Advance A/c	30,000
	1,50,000		1,50,000

Working Note:

Calculation of interest on Calls in Advance 12% of 20,000 for 3 months + 12% of 30,000 for 7 months

`= (20000xx12/100 xx 3/12) + (30000xx12/100xx7/12)`

= 600 + 2,100

= ₹ 2,700