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A Company Issues the Following Debentures: (I) 10,000, 12% Debentures of Rs 100 Each at Par but Redeemable at Premium of 5% After 5 Years; - Accountancy

Numerical

A company issues the following debentures:

(i) 10,000, 12% debentures of Rs 100 each at par but redeemable at premium of 5% after 5 years;

(ii) 10,000, 12% debentures of Rs 100 each at a discount of 10% but redeemable at par after 5 years;

(iii) 5,000, 12% debentures of Rs 1,000 each at a premium of 5% but redeemable at par after 5 years;

(iv) 1,000, 12% debentures of Rs 100 each issued to a supplier of machinery costing Rs 95,000. The debentures are repayable after 5 years; and

(v) 300, 12% debentures of Rs 100 each as a collateral security to a bank which has advanced a loan of Rs 25,000 to the company for a period of 5 years.

Pass the journal entries to record the: (a) issue of debentures; and (b) repayment of debentures after the given period.

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Solution

In the books of …………..

Journal

a) Issue of Debentures

S. No.

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

(i)

Bank A/c

Dr.

 

10,00,000

 

 

 

To 12% Debenture Application A/c

 

 

10,00,000

 

(Debenture Application money of 10,000 12% debentures

@ 100 each received)

 

 

 

 

12% Debenture Application A/c

Dr.

 

10,00,000

 

 

Loss on Issue of Debenture A/c

Dr.

 

50,000

 

 

 

To 12% Debenture A/c

 

 

10,00,000

 

 

To Premium on Redemption of Debenture A/c

 

 

50,000

 

(Debenture Application money of 10,000 12% debentures @ Rs 100 each transferred to 12% Debentures Account and the Debentures are issued with term of repayable at 5% premium)

 

 

 

(ii)

Bank A/c

Dr.

 

9,00,000

 

 

 

To Debenture Application and Allotment A/c

 

 

9,00,000

 

(Debenture Application money received excluding discount on issue)

 

 

 

 

12% Debenture Application & Allotment A/c

Dr.

 

9,00,000

 

 

Discount on Issue of Debenture A/c

Dr.

 

1,00,000

 

 

 

To Debentures A/c

 

 

10,00,000

 

(Debenture Allotment made due)

 

 

 

(iii)

Bank A/c

Dr.

 

52,50,000

 

 

 

To Debenture Application and Allotment A/c

 

 

52,50,000

 

(Debenture Application money received)

 

 

 

 

Debenture Application and Allotment A/c

Dr.

 

52,50,000

 

 

 

To Debenture A/c

 

 

50,00,000

 

 

To Security Premium A/c

 

 

2,50,000

 

(Allotment of debenture at premium)

 

 

 

(iv)

Machinery A/c

Dr.

 

95,000

 

 

 

To Vender A/c

 

 

95,000

 

(Machinery purchased from supplier)

 

 

 

 

 

Vender A/c

Dr.

 

95,000

 

 

Discount on Issue of Debenture

Dr.

 

5,000

 

 

 

To 12% Debenture A/c

 

 

1,00,000

 

(Debenture issue at discount to vender of machinery)

 

 

 

(v)

12% Debenture Suspense A/c

Dr.

 

30,000

 

 

 

To Debenture A/c

 

 

30,000

 

(300, 12% Debentures of Rs 100 each issued as collateral

security to the bank against a loan of Rs 25,000)

 

   

b) Repayment of Debentures

S.No.

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

(i)

12% Debentures A/c

Dr.

 

10,00,000

 

 

Premium on Redemption of Debenture A/c

Dr.

 

50,000

 

 

 

To Debenture Holders A/c

 

 

10,50,000

 

(Amount due on redemption of debentures)

 

 

 

 

Debenture Holders A/c

Dr.

 

10,50,000

 

 

 

To Bank A/c

 

 

10,50,000

 

(Payment made to Debenture Holders)

 

 

 

(ii)

12% Debenture A/c

Dr.

 

10,00,000

 

 

 

To Debenture Holders A/c

 

 

10,00,000

 

(Amount due on redemption of debentures)

 

 

 

 

Debenture Holders A/c

Dr.

 

10,00,000

 

 

 

To Bank A/c

 

 

10,00,000

 

(Payment made to Debenture Holders)

 

 

 

(iii)

12% Debenture A/c

Dr.

 

50,00,000

 

 

 

To Debenture Holders A/c

 

 

50,00,000

 

(Amount due on redemption of debentures)

 

 

 

 

Debenture Holders A/c

Dr.

 

50,00,000

 

 

 

To Bank A/c

 

 

50,00,000

 

(Payment made to Debenture Holders)

 

 

 

(iv)

12% Debenture A/c

Dr.

 

1,00,000

 

 

 

To Vender A/c

 

 

1,00,000

 

(Amount due to vender)

 

 

 

 

Vender A/c

Dr.

 

1,00,000

 

 

 

To Bank

 

 

1,00,000

 

(Payment made to vender)

 

 

 

(v)

12% Debenture A/c

Dr.

 

30,000

 

 

 

To Debenture Suspense A/c

 

 

30,000

 

(Debenture and debenture Suspense Account closed)

     
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APPEARS IN

NCERT Class 12 Accountancy - Company Accounts and Analysis of Financial Statements
Chapter 2 Issue and Redemption of Debentures
Numerical Questions | Q 15 | Page 137
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