Question

Kamya Ltd. issued 30,000, 8% Debentures of ₹ 100 each at 10% premium for subscription. The issue price was payable ₹ 40 on application, ₹ 40 (including premium) on allotment and balance on first and final call. It received application money amounting to ₹ 10,80,000. Allotment was made and allotment money was received. First and final call is yet to be made.

You are required to pass the necessary Journal entries.

Answer 1

Journal Entries In the Books of Kamya Ltd.
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Bank A/c   ...Dr.		10,80,000
	To Debentures Application A/c			10,80,000
	(Application money received on 27,000 debentures)
2.	Debentures Application A/c   ...Dr.		10,80,000
	To 8% Debentures A/c			10,80,000
	(Application money transferred to Debentures A/c)
3.	Debentures Allotment A/c   ...Dr.		10,80,000
	To 8% Debentures A/c			8,10,000
	To Securities Premium A/c			2,70,000
	(Allotment money due @ ₹ 40 per debenture, including premium of ₹ 10)
4.	Bank A/c   ...Dr.		10,80,000
	To Debentures Allotment A/c			10,80,000
	(Allotment money received)

Working Notes:

Applications received:

`(10,80,000)/40 = 27,000` Debentures

Therefore, 27,000 debentures were allotted.

Application Money:

27,000 × ₹ 40 = ₹ 10,80,000

Allotment Money: ₹ 40 per debenture, including premium of ₹ 10

27,000 × ₹ 40 = ₹ 10,80,000

Out of ₹ 40:

₹ 30 towards Debentures + ₹ 10 Premium

Debenture amount on allotment:

27,000 × ₹ 30 = ₹ 8,10,000

Securities Premium:

27,000 × ₹ 10 = ₹ 2,70,000

First and Final Call:

₹ 100 − ₹ 40 − ₹ 30 =  ₹ 30 per debenture

Since the First and Final Call is yet to be made, no entry is passed for it