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Question
A limited company issued ₹ 1,00,000, 9% Debentures at a discount of 6% on 1st April, 2017. These debentures are to be redeemed equally, spread over 5 annual instalments.
Pass the Journal entries for issue of debentures and writing off the discount.
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Solution
In the books of S. Singh Ltd.
Journal
|
Date |
Particulars |
|
L.F. |
Debit Amount (₹) |
Credit Amount (₹) |
|
2017 |
|
|
|
||
|
April 01 |
Bank A/c |
Dr. |
94,000 |
|
|
|
|
To Debentures Application & Allotment A/c |
|
|
94,000 |
|
|
|
(Being application money received on 9% Debentures issued at 6% discount) |
|
|
|
|
|
|
|
|
|
||
|
April 01 |
Debentures Application & Allotment A/c |
Dr. |
94,000 |
|
|
|
|
Discount on Issue of Debentures A/c |
Dr. |
6,000 |
|
|
|
|
To 9% Debentures A/c |
|
|
1,00,000 |
|
|
|
(Being application & allotment money adjusted) |
|
|
|
|
|
2018 |
|
|
|
||
|
March 31 |
Statement of Profit & Loss A/c |
Dr. |
6,000 |
|
|
|
|
To Discount on Issue of Debentures A/c |
|
|
6,000 |
|
|
|
(Being discount on issue of debentures written off) |
|
|
|
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RELATED QUESTIONS
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Journalise the following:
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Pass journal entries in the following cases:
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| On 31st March, 2016 | 2,000 Debentures; |
| On 31st March, 2017 | 5,000 Debentures; |
| On 31st March, 2018 | 3,000 Debentures. |
Prepare the Loss on Issue of Debentures Account, Debentures Account and Premium on Redemption of Debentures Account for three years.
Fill in the blank.
For recording the issue of debentures as collateral security by a journal entry _______ account is debited.
Excess value of net assets over purchase consideration at the time of purchase of business is credited to ______.
The debentures are issued with a specified rate of interest, which is called the coupon rate are known as which types of debentures?
Pick the odd one out.
Loss on issue of debentures is treated as ______.
10% Debenture issued at ₹ 105 is repayable at ₹ 110, the face value of the debenture being ₹ 100. Calculate the amount of loss on redemption of debentures.
Assertion (A): Sarita Pvt. Ltd. issued 15% 10,000 debentures at par @ ₹ 100 per debenture. The company suffered a loss but still the directors of the company paid interest on debentures.
Reason (R): Interest on debenture is a charge against profits and therefore, its payment is not subject to the earning of profit.
X Ltd. purchased assets of ₹ 18,00,000 and took over liabilities of ₹ 6,00,000 of Y Ltd. for a purchase consideration of ₹ 10,00,000. The payment to Y Ltd. was made by issue of 9% debentures of ₹ 100 each at ₹ 125. Calculate the number of 9% debentures issued in favour of Y Ltd. and pass the necessary journal entries for the above transactions in the books of X Ltd.
