Question

Raja Ltd. issued 5,000; 9% Debentures of ₹ 100 each at a premium of ₹ 40 payable as follows:

1. ₹ 40, including premium of ₹ 10 on application;
2. ₹ 45, including premium of ₹ 15 on allotment; and
3. Balance as first and final call.

The issue was subscribed and allotment made. Calls were made and due amount was received.

Pass Journal entries.

Answer 1

Journal Entries In the Books of Raja Ltd.
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Bank A/c   ...Dr.		2,00,000
	To Debentures Application A/c			2,00,000
	(Application money received)
2.	Debentures Application A/c   ...Dr.		2,00,000
	To 9% Debentures A/c			1,50,000
	To Securities Premium A/c			50,000
	(Application money transferred, including premium of ₹ 10 per debenture)
3.	Debentures Allotment A/c   ...Dr.		2,25,000
	To 9% Debentures A/c			1,50,000
	To Securities Premium A/c			75,000
	(Allotment money due, including premium of ₹ 15 per debenture)
4.	Bank A/c   ...Dr.		2,25,000
	To Debentures Allotment A/c			2,25,000
	(Allotment money received)
5.	Debentures First and Final Call A/c   ...Dr.		2,75,000
	To 9% Debentures A/c			2,00,000
	To Securities Premium A/c			75,000
	(First and final call due, including premium of ₹ 15 per debenture)
6.	Bank A/c  ...Dr.		2,75,000
	To Debentures First and Final Call A/c			2,75,000
	(First and final call money received)

Working note:

Face value of debentures:

5,000 × ₹ 100 = ₹ 5,00,000

Total premium:

5,000 × ₹ 40 = ₹ 2,00,000

Application: ₹ 40 per debenture = ₹ 30 capital + ₹ 10 premium

5,000 × ₹ 40 = ₹ 2,00,000

Allotment: ₹ 45 per debenture = ₹ 30 capital + ₹ 15 premium

5,000 × ₹ 45 = ₹ 2,25,000

First and Final Call:

₹ 140 − ₹ 40 − ₹ 45 = ₹ 5

It includes:

₹ 40 Capital + ₹ 15 Premium

5,000 × ₹ 55 = ₹ 2,75,000