Question

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

1. 900, 6% debentures of ₹ 1,000 each are issued at 5% discount and redeemable at par. Balance in Securities Premium account is ₹ 50,000.
2. 700, 8% debentures of ₹ 1,000 each are issued at 10% discount and redeemable at a premium of 10%. Balance in Securities Premium account is ₹ 1,00,000. 

Answer 1

Journal Entries
Date	Particular	L.F.	Amount Dr.	Amount Cr.
(i)	Bank A/c   ...Dr.		8,55,000	-
	To Debentures Application and Allotment A/c		-	8,55,000
	(Being debenture application and allotment money received)
	Debentures Application and Allotment A/c   ...Dr.		8,55,000	-
	Discount on issue of debentures A/c   ...Dr.		45,000	-
	To 6% debentures A/c		-	9,00,000
	(Being debentures application and allotment money due)
	Securities Premium A/c   ...Dr.		45,000	-
	To Discount on issue of debentures A/c		-	45,000
	(Being discount on issue of debentures written off)
(ii)	Bank A/c   ...Dr.		6,30,000	-
	To Debentures Application and Allotment A/c		-	6,30,000
	(Being debenture application and allotment money received)
	Debentures Application and Allotment A/c   ...Dr.		6,30,000	-
	Loss on issue of debenture A/c   ...Dr.		1,40,000	-
	To 8% Debentures A/c		-	7,00,000
	To Premium payable on redemption A/c		-	70,000
	(Being debenture application and allotment money due)
	Securities Premium A/c   ...Dr.		1,00,000	-
	Statement of Profit & Loss A/c   ...Dr.		40,000	-
	To Loss on Issue of Debentures A/c		-	1,40,000
	(Being loss on issue of debentures written off)