Question

Pass Journal entries relating to issue of debentures in the books of Anand Ltd. in each of following cases, if issue price is payable in lump sum:

1. Issued 30,000, 9% Debentures of ₹ 100 each at a premium of 10%, redeemable at par.
2. Issued 4,000, 9% Debentures of ₹ 100 each at a premium of 15%, redeemable at a premium of 10%.
3. Issued 5,000, 9% Debentures of ₹ 100 each at a discount of 5%, redeemable at a premium of 10%.

Answer 1

JOURNAL ENTRIES OF ANAND LTD.
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
(a)	Bank A/c   ...Dr.		33,00,000
	To Debentures Application and Allotment A/c			33,00,000
	(Debenture Application money received)
	Debentures Application and Allotment A/c   ...Dr.		33,00,000
	To 9% Debentures A/c			30,00,000
	To Securities Premium A/c			3,00,000
	(Application money transferred to Debentures A/c and Securities Premium A/c)
(b)	Bank A/c   ...Dr.		4,60,000
	To Debentures Application and Allotment A/c			4,60,000
	(Debenture Application money received)
	Debentures Application and Allotment A/c   ...Dr.		4,60,000
	Loss on Issue of Debentures A/c   ...Dr.		40,000
	To 9% Debentures A/c			4,00,000
	To Premium on Redemption of Debentures A/c			40,000
	To Securities Premium A/c			60,000
	(Application amount transferred to Debentures A/c, Securities Premium A/c and Premium on Redemption of Debentures Account)
(c)	Bank A/c   ...Dr.		4,75,000
	To Debentures Application and Allotment A/c			4,75,000
	(Debenture Application money received)
	Debentures Application and Allotment A/c   ...Dr.		4,75,000
	Loss on Issue of Debentures A/c   ...Dr.		75,000
	To 9% Debentures A/c			5,00,000
	To Premium on Redemption of Debentures A/c			50,000
	(Debenture Application money transferred to Debentures A/c and to Premium on Redemption of Debentures Account)