Question

R Ltd. issued 8,000, 13% Debentures of ₹ 100 each at a discount of 5% payable as follows:

On Application	₹ 25
On Allotment	₹ 25
On First and Final Call	The balance amount

Public applied for 6,000 debentures. All the moneys were duly received. Expenses on issue of debentures amounted to ₹ 20,000.

Pass journal entries and show the above accounts in the Company’s Balance Sheet at the end of the first year. Company decided to write off the discount on issue of debentures in the first year itself.

Answer 1

Journal of R Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c   ...Dr.		1,50,000	-
	To 13% Debenture Application A/c		-	1,50,000
	(Application money received on 6,000 debentures @ ₹ 25 each.)
2.	13% Debenture Application A/c   ...Dr.		1,50,000	-
	To 13% Debentures A/c		-	1,50,000
	(Application money transferred to Debenture A/c.)
3.	13% Debenture Allotment A/c   ...Dr.		1,50,000	-
	Discount on Issue of Debentures A/c   ...Dr.		30,000	-
	To 13% Debentures A/c		-	1,80,000
	(Being allotment money due on 6,000 debentures and discount on issue)
4.	Bank A/c  ...Dr.		1,50,000	-
	To Debenture Allotment A/c		-	1,50,000
	(Allotment money received.)
5.	13% Debenture First & Final Call A/c   ...Dr.		2,70,000	-
	To 13% Debentures A/c		-	2,70,000
	(Being first and final call money due on 6,000 debentures)
6.	Bank A/c   ...Dr.		2,70,000	-
	To Debenture First & Final Call A/c		-	2,70,000
	(Call money received.)
7.	Debenture Issue Expenses A/c   ...Dr.		20,000	-
	To Bank A/c		-	20,000
	(Being debenture issue expenses paid)
8.	Statement of Profit & Loss A/c   ...Dr.		50,000	-
	To Discount on Issue of Debentures A/c		-	30,000
	To Debenture Issue Expenses A/c		-	20,000
	(Being discount and issue expenses written off in the first year)