Question

XXL Ltd. converted its 500, 9% debentures of Rs 100 each issued at a dsicount of 8% into equity shares of Rs 10 each issued at a premium of 25%. Discount on issue of debentures has not yet been written off.
Showing your workings clearly pass necessary Journal Entries on conversion of 9% debentures into equity shares.   

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	9% Debentures A/c	Dr.		50,000
	To Debentureholders’ A/c				50,000
	(500, 9% Debentures due for redemption)
	Debentureholders’ A/c	Dr.		50,000
	To Equity Share Capital A/c (4,000 × 10)				40,000
	To Securities Premium A/c (4,000 × 2.50)				10,000
	(500, 9% Debentures redeemed by converting into 4,000 equity shares of Rs 10 each issued at a premium of 25%)
	Securities Premium A/c	Dr.		4,000
	To Discount on Issue of Debentures A/c				4,000
	(Discount on issue of debentures written off against balance in securities premium account)