Question

Pass necessary journal entries relating to issue of debentures and to write off discount/loss on issue of debentures in the books of Dhatu Ltd. in the following cases:

1. 400, 11% debentures of ₹ 1,000 each are issued at 10% discount and redeemable at par. Balance in Securities Premium Account is ₹ 50,000.
2. 500, 10% debentures of ₹ 1,000 each are issued at 10% discount and redeemable at a premium of 10%. Balance in Securities Premium Account is ₹ 75,000. 

Answer 1

Journal Entries
Date	Particulars	L.F.	Amount Dr.	Amount Cr.
(i)	Bank A/c (400 × 900)   ...Dr.		3,60,000	-
	To Debenture Application and Allotment A/c		-	3,60,000
	(Being debenture application and allotment money received)
	Debenture Application and Allotment A/c   ...Dr.		3,60,000	-
	Discount on issue of Debenture A/c   ...Dr.		40,000	-
	To 11 % debenture A/c		-	4,00,000
	(Being debenture application and allotment money due)
	Securities Premium A/c   ...Dr.		40,000	-
	To Discount on issue of Debenture A/c		-	40,000
	(Being discount on Issue of debenture written of using security Premium A/c)
(ii)	Bank A/c (500 × 900)   ...Dr.		4,50,000	-
	To Debenture Application and Allotment A/c		-	4,50,000
	(Being debenture application and allotment money received)
	Debenture Application and Allotment A/c   ...Dr.		4,50,000	-
	Loss on Issue of Debenture (500 × 200) A/c   ...Dr.		1,00,000	-
	To 10% Debenture A/c		-	5,00,000
	To Premium Payable on Redemption A/c		-	50,000
	(Being debenture application A/c and allotment money due)
	Securities Premium A/c   ...Dr.		75,000	-
	Statement of Profit and Loss A/c   ...Dr.		25,000	-
	To Loss on Issue of Debenture A/c		-	1,00,000
	(Being Loss on Issue of debenture written off)