Question

On 1st April, 2024, Luxury Cosmetics Ltd. issued 30,000, 9% debentures of ₹ 500 each at a discount of 4%, redeemable at a premium of 5% after 4 years, payable as ₹ 200 on application and balance on allotment. Record necessary entries for issue of debentures. Luxury cosmetics has a balance of ₹ 20,00,000 in Securities Premium.

Answer 1

In the books of Luxury Cosmetics Ltd.
Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
Apr. 1	Bank A/c (30,000 × 200)   ...Dr.		60,00,000	-
	To Debenture Application A/c		-	60,00,000
	(Being application money received.)
Apr. 1	Debenture Application A/c   ...Dr.		60,00,000	-
	To 9% Debenture A/c		-	60,00,000
	(Being application money transfer to Debenture A/c.)
Apr. 1	Bank A/c (30,000 × 280)   ...Dr.		84,00,000	-
	To Debenture Allotment A/c		-	84,00,000
	(Being application money received.)
Apr. 1	Debenture Allotment A/c   ...Dr.		84,00,000	-
	Discount on Issue of Debenture A/c (30,000 × 20)   ...Dr.		6,00,000	-
	Loss on Issue of Debentures A/c   ...Dr.		7,50,000	-
	To 9% Debenture A/c (30,000 × 300)		-	90,00,000
	To Premium on Redemption A/c (30,000 × 25)		-	7,50,000
	(Being application money transfer to Debenture A/c.)
Apr. 1	Securities Premium A/c   ...Dr.		13,50,000	-
	To Loss on Issue of Debenture A/c		-	7,50,000
	To Discount on Issue of Debentures A/c		-	6,00,000
	(Being loss and discount on issue of debenture written off.)