Question

X Ltd. invited applications for issuing 1000, 9% debentures of Rs 100 each at a discount of 6%. Applications for 1,200 debentures were received. Pro-rate allotment was made to all the applicants.

Pass necessary Journal Entries for the issue of debentures assuming that the whole amount was payable with applications.   

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	Bank A/c (1,200 × 94)	Dr.		1,12,800
	To Debenture Application & Allotment A/c				1,12,800
	(Amount received on 1,200 debentures issued at a discount of 6%, face value Rs 100)
	Debenture Application & Allotment A/c	Dr.		1,12,800
	Discount on Issue of Debentures A/c (1,000 × 6)	Dr.		6,000
	To 9% Debentures A/c (1,000 × 100)				1,00,000
	To Bank A/c (200 × 94)				18,800
	(Application and allotment money received transferred to Debentures A/c and balance refunded)