Question

On 1^st April, 2024, Zara Ltd. issued 8,000, 9% Debentures of ₹ 100 each at a discount of 10%. The company had a balance of ₹ 50,000 in the Securities Premium Account on the same date.

Pass necessary journal entries for the issue of debentures and to write off discount on issue of debentures.

Answer 1

Journal Entries In the Books of Zara Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2024
April 1	Bank A/c   ...Dr.		7,20,000
	To Debenture Application and Allotment A/c			7,20,000
	(Being application money received on 8,000 debentures at ₹ 90 each)
April 1	Debenture Application and Allotment A/c   ...Dr.		7,20,000
	Discount on Issue of Debentures A/c   ...Dr.		80,000
	To 9% Debentures A/c			8,00,000
	(Being application money transferred to 9% Debentures account and discount on issue recorded)
2025 March 31	Securities Premium A/c   ...Dr.		50,000
	Statement of Profit and Loss   ...Dr.		30,000
	To Discount on Issue of Debentures A/c			80,000
	(Being a discount on the issue of debentures written off using the entire securities premium balance and the remainder from profit and loss)