Question

Pass necessary Journal entries for the issue of Debentures in the following cases:
(a)  ₹ 40,000; 15% Debentures of  ₹ 100 each issued at a discount of 10% redeemable at par.
(b)  ₹ 80,000; 15% Debentures of  ₹ 100 each issued at a premium of 10% redeemable at a premium of 10%.

Answer 1

(a)

Journal

Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c	Dr.		36,000
	To Debenture Application A/c				36,000
	(400 debentures issued at Rs 100 at discount of 10%)
	Debenture Application A/c	Dr.		36,000
	Discount on Issue of Debentures A/c	Dr.		4,000
	To 15% Debenture A/c				40,000
	(400 debentures issued at discount and redeemable at a par )

(b) 

Journal

Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c	Dr.		88,000
	To Debenture Application A/c				88,000
	(800 debentures issued at Rs 100 at a premium of 10%)
	Debenture Application A/c	Dr.		88,000
	Loss on Issue of Debentures A/c	Dr.		8,000
	To 15% Debenture A/c				80,000
	To Premium on Redemption A/c				8,000
	To Securities Premium A/c				8,000
	(800 debentures issued at a premium of 10% and redeemable at a premium of 10%)