Question

On 1^st April, 2024, Zubin Ltd. issued 3,000, 8% Debentures of ₹ 100 each at a discount of 5% to be redeemed after two years at a premium of 6%.

On 31st March, 2025, Zubin Ltd. had the following balances in its books before adjustments of capital losses:

Securities Premium	₹ 23,000
Statement of Profit/Loss	₹ 18,000
General Reserve	₹ 20,000

The company writes off all its capital losses in the same year.

You are required to prepare the following for the year 2024-2025:

1. Loss on Issue of Debentures A/c (2)
2. Securities Premium A/c (1)

Answer 1

i.

Dr.	Loss on Issue of Debenture A/c				Cr.
Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
1.4.2024	To 8% Debenture A/c	15,000	31.03.2025	By Securities Premium A/c	23,000
1.4.2024	To Premium on Redemption of Debenture A/c	18,000	31.03.2025	By Statement of Profit/Loss	10,000
		33,000			33,000

ii.

Dr.	Securities Premium A/c				Cr.
Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
31.3.2025	To Loss on issue of Debentures A/c	23,000	1.4.2024	By Balance b/d	23,000
		23,000			23,000

Working Note:

Total face value of debentures = 3,000 debentures × ₹ 100

= ₹ 3,00,000

Discount on issue = 5% of ₹ 3,00,000

= ₹ 15,000

Premium on redemption = 6% of ₹ 3,00,000

= ₹ 18,000

Total Loss on Issue of Debentures (capital loss) = Discount on Issue + Premium on Redemption

= ₹ 15,000 + ₹ 18,000

= ₹ 33,000

As per the Companies Act, the loss on issue can be written off against the Securities Premium A/c and then the remaining balance from the Statement of Profit/Loss.

Securities Premium A/c opening balance = ₹ 23,000

Amount available in Securities Premium A/c to write off the loss = ₹ 23,000

Balance Loss to be written off from Statement of Profit/Loss = ₹ 33,000 − ₹ 23,000

= ₹ 10,000