Question

Record necessary journal entries in the following case:

30,000, 7% debentures of Rs. 100 each, issued at a 5% discount and redeemable at a 2½% premium.

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c   ...Dr.		28,50,000	-
	To Debenture Application & Allotment A/c		-	28,50,000
	(Being application money received after a 5% discount)
2.	Debenture Application & Allotment A/c   ...Dr.		28,50,000	-
	Loss on Issue of Debentures A/c   ...Dr.		2,25,000	-
	To 7% Debentures A/c		-	30,00,000
	To Premium on Redemption of Debentures A/c		-	75,00,000
	(Being debentures issued at a discount and redeemable at a premium)

Working Note:

Total Face Value = 30,000 × 100

= 30,00,000

Discount on Issue = `30,00,000 xx 5/100`

= 1,50,000

Premium on Redemption = `30,00,000 xx 2.5/100`

= 75,000

Total Loss on Issue = Discount + Premium

= 1,50,000 + 75,000

= 2,25,000