Question

Pass necessary Journal entries for the issue of debentures in the following cases:

1. ₹ 40,000; 12% Debentures of  ₹ 100 each issued at a premium of 5% redeemable at par.
2. ₹ 70,000; 12% Debentures of  ₹ 100 each issued at a premium of 5% redeemable at ₹ 110.

Answer 1

Journal Entry
Date	Particulars	L.F.	Debit Amount (₹)	Credit Amount (₹)
(a)
	Bank A/c   ...Dr.		42,000
	To Debenture Application and Allotment A/c			42,000
	(Being 400 debentures issued at ₹ 100 at a premium of 5%)
	Debenture Application A/c   ...Dr.		42,000
	To 12% Debenture A/c			40,000
	To Securities Premium A/c			2,000
	(Being 400 debentures issued at a premium of 5% and redeemable at par)
(b)
	Bank A/c   ...Dr.		73,500
	To Debenture Application A/c			73,500
	(Being 700 debentures issued at Rs 100 at a premium of 5%)
	Debenture Application A/c   ...Dr.		73,500
	Loss on Issue of Debentures A/c   ...Dr.		7,000
	To 12% Debenture A/c			70,000
	To Securities Premium A/c			3,500
	To Premium on Redemption A/c			7,000
	(Being 70,000 debentures issued at a premium of 5% and redeemable at Rs 110)