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प्रश्न
State to whether the following statement is True/False.
The issue of debenture more than face value is termed on issue of debentures at par.
विकल्प
True
False
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उत्तर
False
Explanation: Issue of debentures at a price more than their face value is known as ‘issue of debentures at a premium’. The amount of a premium so received is credited to the Securities Premium Account.
APPEARS IN
संबंधित प्रश्न
The issue of debenture more than the face value is termed as an issue of debenture at par.
On 1-4-2015 V.V.L. Ltd issued 1000, 9% debentures of Rs 100 each at a discount of 6%, redeemable at a premium of 10% after three years.
Pass necessary journal entries for the issue of debentures and debentures interest for the year ended 31-3-2016, assuming that interest is payable on 30th September and 31st March and the rate of tax deducted at source is 10%. The company closes its books on 31st March every year.
BBG Ltd. invited applications for issuing 2,00,000 equity shares of Rs 10 each at a premium of Rs 10 per share. The amount was payable as follows:
On Application − Rs 4 per share (including Rs 2 premium)
On Allotment − Rs 5 per share (including Rs 2 premium)
On First call − Rs 5 per share (including Rs 3 premium)
On Second and final call − Balance amount
The issue was fully subscribed. Raghu, a shareholder holding 1000 shares, failed to pay the allotment money and Rahim, another shareholder holding 1500 shares, paid his entire share money along with allotment. Raghu's shares were forfeited immediately after allotment. Afterwards, the first call was made Deenanath, a shareholder holding 500 shares, failed to pay the first call money and Dayal, a shareholder holding 600 shares, paid his second call money along with the first call. Deenanath's shares were forfeited immediately after the first call. Later on the second call was made which was duly received.
Pass necessary journal entries for the above transactions in the books of BBG Ltd.
Joy Ltd. invited applications for issuing 20,000 equity shares of Rs 10 each at par. The amount was payable as follows:
On Application − Rs 3 per share
On Allotment − Rs 4 per share
On First and find call − Balance amount
The issue was oversubscribed by three times. Applications for 20% shares were rejected and the money was refunded. Allotment was made to the remaining applicants as follows:
| Category | No. of Shares Applied | No. of Shares Allotted |
| I | 30,000 | 15,000 |
| II | 18,000 | 5,000 |
Excess money received with applications was adjusted towards sums due on allotment. Money in excess to sums due on allotment was adjusted towards sums due on first and final call and any money in excess to sums due on first and final call was refunded. Kavi, a shareholder who had applied for 600 shares, failed to pay the remaining allotment money and his shares were immediately forfeited. Kavi belonged to Category I.
Afterwards the first and final call was made. Gupta, who had applied for 400 shares, failed to pay the first and final call. Gupta also belonged to Category I.
Shares of Gupta were also forfeited after the first and final call. The forfeited shares were reissued at Rs 12 per share fully paid up.
Pass necessary journal entries for the above transactions in the books of Joy Ltd.
Pass the necessary Journal entries of the issues and redemption of Debentures in the following cases:
(i) 10,000, 10% Debentures of Rs 120 each issued at 5% premium, repayable at par.
(ii) 20,000, 9% Debentures of Rs 200 each issued at 20% premium, repayable at 30% premium.
On 1st April, 2008 a company made an issue of Rs 2,00,000, 6% Debentures of Rs 100 each, repayable at a premium of 10%. The terms of issue provided for the redemption of 400 debentures every year starting from the end of 31-3-2010 either by purchase from the open market or by draw of lots at the company’s option.
On 31-3-2010, the company purchased for cancellation 300 debentures at 95% and 100 debentures at 90%.
Pass the necessary Journal entries for the issue and redemption of debentures assuming that the company had already created the
Debentures Redemption Reserve A/c by the require amount.
Nav Lakshmi Ltd. Invited application for issuing 3,000, 12% Debentures of Rs 100 each at a premium of Rs 50 per Debentures. The full amount was payable on application.
Applications were received for 4,000 debentures. Application for 1,000 debentures were rejected and application money was refunded. Debentures were allotted to the remaining applicants.
Pass necessary Journal entries for the above transaction in the books of Nav Lakshmi Ltd
Pass necessary Journal entries for the following transaction in the books of Fortune Ltd:
(i) Redeemed Rs 96,000, 12% Debenture by conversion into Equity Shares of Rs 100 each. The
Equity Shares were issued at a discount 4%.
(ii) Converted 4,800, 12% Debentures of Rs 100 each into New 13% Debentures of Rs 100 each.
The new Debentures were issued at a premium 25%.
DN Ltd. issued 50,000 shares of Rs 10 each at a discount of 10% payable as Rs 2 per share on application Rs 3 on allotment and Rs 2 each on first and final call. Applications were received for 70,000 shares. It was decided that
(a) Refuse allotment to the applicants of 10,000 shares,
(b) Allot 10,000 shares to Mohan who had applied for a similar number, and
(c) Allot the remaining share on a pro-rata basis.
Mohan failed to pay the allotment money and Sohan who belonged to category (c) and was allotted 3,000 shares, paid both the calls with allotment, Calculate the amount received on allotment.
Devi Ltd., on 1st April 2006 acquired assets of the value of Rs 6,00,000 and liabilities worth Rs 70,000 from P & Co., at an agreed value of Rs 5,50,000. Devi Ltd. issued 12% Debentures of Rs 100 each at a premium of 10% in full satisfaction of purchase consideration. The Debentures were redeemable 3 years later at a premium of 5%. Pass entries to record the above including redemption of debentures.
Answer in a sentence only.
What is meant by ‘Issue of debenture at discount and redeemable at premium’?
Write one word/term/phrase which can substitute the following
The debentures where a charge is created on the assets of company.
Select most appropriate alternative from those given below :
The issue of debentures less than the face value is called ___________.
State to whether the following statement is True/False.
The issue of debentures less than face value of debenture to termed as issue of debentures at discount.
Amar Ltd. purchased assets of the book value of Rs 99,000 from Abhi Ltd. It was agreed that purchase consideration to be paid by issuing 11% Debentures of Rs 100 each Assume debentures have been issued.
1. At par
2. At Discount of 10% and
3. At Premium of 10%
Record necessary journal entries
BGP Ltd. invited applications for issuing 15,000, 11% debentures of ₹ 100 each at a premium of ₹ 50 per debenture. The full amount was payable on application. Applications were received for 25,000 debentures. Applications for 5,000 debentures were rejected and the application money was refunded. Debentures were allotted to the remaining applicants on a pro-rata basis.
Pass the necessary journal entries for the above transactions in the books of BGP Ltd.
Suhas Ltd. issued 1,000, 7% Debentures of ₹ 100 each to be redeemed after three years at a premium of 5%. The face value of the debentures was payable as:
₹ 20 on Application
₹ 30 on Allotment (on 1st May, 2020)
₹ 30 on First call (on 1st October, 2020)
₹ 20 on Final call (on 1st January, 2021)
All the debentures were applied and allotted.
Ali, to whom 20 debentures were allotted, paid the allotment money and the two calls on 31st March, 2021. The Articles of Association of the company provided for interest on calls-in-arrear to be charged @ 10% per annum, which Ali paid on 31st March, 2021.
You are required to pass journal entries in the books of Suhas Ltd. to record:
- The adjustment and receipt of interest on calls in arrears
- The entry to close the interest on calls in arrears account
As per Companies Act 2013, Securities Premium Balance can be utilised for which of the following purpose?
Pass necessary journal entries for the issue of debentures in the following cases:
- Issued 50,000, 9% debentures of ₹ 100 each at par redeemable at par.
- Issued 10,000, 8% debentures of ₹ 100 each at 7% premium redeemable at par.
- Issued 750, 8% debentures of ₹ 100 each at 10% discount redeemable at par.
- Issued 1,000, 9% debentures of ₹ 100 each at 5% premium redeemable at 8% premium.
- Issued 500, 9% debentures of ₹ 100 each at 10% discount redeemable at 10% premium.
Pass necessary journal entries for the issue of debentures in the following cases :
- Issued ₹ 75,00,000, 9% debentures of ₹100 each at a premium of 10% redeemable at a premium of 5% after 3 years.
- Issued 8,000, 9% debentures of ₹100 each at a discount of 6% redeemable at a premium of 3% after 5 years.
- Issued 90,000, 9% debentures of ₹100 each at par, redeemable at par after 4 years.
Which of the following statement is incorrect with respect to debentures?
'Vimal Ltd. purchased assets a worth ₹ 5,00,000 and took over liabilities of ₹ 1,00,000 of Kapil Ltd. for a purchase consideration of ₹ 4,50,000. Vimal Ltd. paid one third of the amount of cheque and balance was settled by issuing 11% debentures of 100 each at a premium of 20%.
Pass necessary journal entries in the books of Vimal Ltd. for the above transactions.
On 1st April 2022, Galaxy ltd. had a balance of ₹8,00,000 in Securities Premium account. During the year company issued 20,000 Equity shares of ₹10 each as bonus shares and used the balance amount to write off Loss on issue of Debenture on account of issue of 2,00,000, 9% Debentures of ₹100 each at a discount of 10% redeemable @ 5% Premium. The amount to be charged to Statement of P & L for the year for Loss on issue of Debentures would be:
Alexa Ltd. purchased building from Siri Ltd for ₹ 8,00,000. The consideration was paid by issue of 6% debentures of ₹ 100 each at a discount of 20%. The 6% Debentures account is credited with ______.
The following balances have been extracted from the books of Nirvana Ltd, as at 31st March, 2024:
| Particulars | (₹) | Particulars | (₹) |
| Security deposit for electricity for ten years | 30,000 | Uncalled amount on partly paid-up shares | 8,00,000 |
| Underwriting commission | 20,000 | 10% Debentures | 5,00,000 |
| General Reserve | 70,000 | Statement of P/L (Dr.) | 10,000 |
| Fixed Deposits | 2,00,000 | Calls-in arrears @ ₹ 1 per share | 40,000 |
| Premium on redemption of Debentures | 20,000 | Securities Premium | 2,00,000 |
| Equity Share Capital (1,00,000 shares of ₹ 10 each) |
10,00,000 |
You are required to show the above items in Notes to Accounts accompanying the Balance Sheet of Nirvana Ltd. prepared as per Schedule III of the Companies Act 2013 as at 31st March, 2024.
