Question

Raghuveer Limited issued Rs. 10,00,000, 8% debentures as follows to:

	Particulars	Rs.
1.	Sundry Subscribers for Cash at 90%	5,50,000
2.	Vendor of Machinery for Rs. 2,00,000 in satisfaction of his claim	2,00,000
3.	Bankers as Collateral Security for a bank loan worth Rs. 20,00,000, for which the principal security is Business Premises worth Rs. 22,50,000.	2,50,000

The issues (1) and (2) are redeemable at the end of 10 years at par. State how the debenture will be dealt with while preparing the balance sheet of a company.

Answer 1

Balance Sheet of Raghuveer Limited (Extract)
Particulars	Note No.	Amount (₹)
I. EQUITY AND LIABILITIES
1. Non-Current Liabilities
(a) Long-term Borrowings	1	27,50,000
Total		27,50,000

Notes to Accounts:

Note No.	Particulars	Amount (₹)	Amount (₹)
1.	Long-term Borrowings:
	(a) Bank Loan		20,00,000
	(Secured by primary security of Business Premises worth ₹ 22,50,000 and a collateral security of 8% Debentures worth ₹ 2,50,000)
	(b) 8% Debentures
	8% Debentures (Public & Vendor: ₹ 5,50,000 + ₹ 2,00,000)	7,50,000
	Add: 8% Debentures issued as Collateral Security	2,50,000
		10,00,000
	Less: Debenture Suspense Account	(2,50,000)	7,50,000
	Total Long-term Borrowings		27,50,000