Advertisements
Advertisements
Question
A.Ltd. issued 50,00,000, 8% Debenture of Rs 100 at a discount of 6% on April 01, 2009 redeemable at premium of 4% by draw of lots as under:
20,00,000 Debentures on March, 2011
10,00,000 Debentures on March, 2013
20,00,000 Debentures on March, 2014
Compute the amount of discount to be written-off in each year till debentures are paid. Also prepare discount/loss on issue of debenture account.
Advertisements
Solution 1
Loss on issue of debenture = 6% (discount on issue) + 4% (premium on redemption) = 10%
`50,00,000 xx 100 xx 10/100 = 5,00,00,000`
|
At the end of |
Debenture Outstanding |
Ratio |
Loss to be written off every year |
||
|
March 2010 |
50,00,00,000 |
5 |
`5,00,00,000 xx 5/18` |
= |
1,38,88,889 |
|
March 2011 |
50,00,00,000 |
5 |
`5,00,00,000 xx 5/18` |
= |
1,38,88,889 |
|
March 2012 |
30,00,00,000 |
3 |
`5,00,00,000 xx 3/18` |
= |
83,33,333 |
|
March 2013 |
30,00,00,000 |
3 |
`5,00,00,000 xx 3/18` |
= |
83,33,333 |
|
March 2014 |
20,00,00,000 |
2 |
`5,00,00,000 xx 2/18` |
= |
55,55,556 |
|
|
|
18 |
|
|
Rs 5,00,00,000 |
Loss on Issue of Debenture Account
|
Dr. |
|
|
|
|
|
|
Cr. |
|
|
Date |
Particulars |
J.F. |
Amount Rs |
Date |
Particulars |
J.F. |
Amount Rs |
|
|
2009 April 01 |
Debenture |
|
5,00,00,000 |
2010 March 31 |
Profit and Loss |
|
1,38,88,889 |
|
|
|
|
|
|
|
Balance c/d |
|
3,61,11,111 |
|
|
|
|
|
5,00,00,000 |
|
|
|
5,00,00,000 |
|
|
2010 April 01 |
Balance b/d |
|
3,61,11,111 |
2011 March 31 |
Profit and Loss |
|
1,38,88,889 |
|
|
|
|
|
|
|
Balance c/d |
|
2,22,22,222 |
|
|
|
|
|
3,61,11,111 |
|
|
|
3,61,11,111 |
|
|
2011 April 01 |
Balance b/d |
|
2,22,22,222 |
2012 March 31 |
Profit and Loss |
|
83,33,333 |
|
|
|
|
|
|
|
Balance c/d |
|
1,38,88,889 |
|
|
|
|
|
2,22,22,222 |
|
|
|
2,22,22,222 |
|
|
2012 April 01 |
Balance b/d |
|
1,38,88,889 |
2013 March 31 |
Profit and Loss |
|
83,33,333 |
|
|
|
|
|
|
|
Balance c/d |
|
55,55,556 |
|
|
|
|
|
1,38,88,889 |
|
|
|
1,38,88,889 |
|
|
2013 April 01 |
Balance b/d |
|
55,55,556 |
2014 March 31 |
Profit and Loss |
|
55,55,556 |
|
|
|
|
|
55,55,556 |
|
|
|
55,55,556 |
|
Solution 2
| Journal of A Ltd. | ||||
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 2009 | ||||
| April 1 | Bank A/c ...Dr. | 47,00,00,000 | ||
| To Debenture application and allotment | 47,00,00,000 | |||
| (Being application money received) | ||||
| April 1 | Debenture application and allotment A/c | 47,00,00,000 | ||
| Loss on issue of debenture | 5,00,00,000 | |||
| To 8% Debenture | 50,00,00,000 | |||
| To Premium on Redemption | 2,00,00,000 | |||
| (Being amount transferred to debenture A/c) | ||||
| 2010 | ||||
| Mar. 31 | Statement of profit and loss A/c ...Dr. | 5,00,00,000 | ||
| To loss on issue of debenture A/c | 5,00,00,000 | |||
| (Being loss on issue charged to statement of profit and loss account) | ||||
| 2019 | ||||
| April 30 | Debenture redemption Investment A/c ...Dr. | 3,00,00,000 | ||
| To Bank A/c | 3,00,00,000 | |||
| (Being amount invested) | ||||
| 2020 | ||||
| Mar. 31 | 8% Debenture A/c ...Dr. | 20,00,00,000 | ||
|
Premium on redemption A/c ...Dr. |
80,00,000 | |||
| To Debenture holder A/c | 20,80,00,000 | |||
| (Being amount transfer to debenture holder A/c) | ||||
| Mar. 31 | 8% Debenture holder A/c ...Dr. | 20,80,00,000 | ||
|
To Bank A/c |
20,80,00,000 | |||
| (Being amount paid to Debenture holder) | ||||
| April 30 | Bank A/c ...Dr. | 1,50,00,000 | ||
| To Debenture redemption Investment A/c | 1,50,00,000 | |||
| (Being debenture Investment sold) | ||||
| 2021 | ||||
| Mar. 31 | 8% Debenture A/c ...Dr. | 10,00,00,000 | ||
| Premium on redemption A/c ...Dr. | 40,00,000 | |||
| To Debenture holder A/c | 10,40,00,000 | |||
| (Being amount transfer to Debenture holder A/c) | ||||
| Mar. 31 | Debenture holder A/c ...Dr. | 10,40,00,000 | ||
| To Bank A/c | 10,40,00,000 | |||
| (Being amount paid to debenture holder) | ||||
| Apr. 30 | Debenture Redemption Investment A/c ...Dr. | 1,50,00,000 | ||
| To Bank A/c | 1,50,00,000 | |||
| (Being amount Invested) | ||||
| 2022 | ||||
| Mar. 31 | Bank A/c ...Dr. | 3,00,00,000 | ||
| To Debenture Redemption Investment A/c | 3,00,00,000 | |||
| (being Investment sold) | ||||
| Mar. 31 | 8% Debenture A/c ...Dr. | 20,00,00,000 | ||
| Premium on Redemption A/c ...Dr. | 80,00,000 | |||
| To Debenture holder A/c | 20,80,00,000 | |||
| (Being amount transfer to debenture holder A/c) | ||||
| Mar. 31 | Debenture holder A/c ...Dr. | 2,08,00,000 | ||
| To Bank A/c | 2,08,00,000 | |||
| (Being amount paid to debenture holder) | ||||
| Loss on Issue of Debenture A/c | |||||
| Date | Particular | Amount | Date | Particular | Amount |
| 2009 | 2010 | ||||
| April 1 | To 8% Debenture A/c | 5,00,00,000 | Mar. 31 | By Statement of Profit and loss A/c | 5,00,00,000 |
| 5,00,00,000 | 5,00,00,000 | ||||
APPEARS IN
RELATED QUESTIONS
Short Answer Question
State the meaning of ‘Debentures issued as a Collateral Security.
A Ltd . issued 2,000; 9% Debentures of ₹ 100 each on the following terms:
₹20 on applications ;₹ 20 on allotment ; ₹ 30 on first call ; ₹ 30 on final call.
The public applied for 2,400 debentures. Applications for 1,800 debentures were accepted in full. Applications for 400 debentures were allotted 200 debentures and applications for 200 debentures were rejected . Pass necessary Journal entries .
Raj Ltd . issued 5,000; 8% Debentures of ₹ 100 each at a premium of 5% payable as follows:
₹ 10 on application ; ₹ 20 along with premium on allotment and balance on first and final call.
Pass necessary Journal entries.
Iron Products Ltd. issued 5,000; 9% Debentures of ₹ 100 each at a premium of ₹ 40 payable as follows;
(i) ₹ 40 , including premium of ₹ 10 on applications;
(ii) ₹ 45, including premium of ₹ 15 on allotment ; and
(iii) Balance as first and final call.
The issue was subscribed and allotment made. Calls were made and due amount was received .
Pass Journal entries .
X Ltd . issued 12,000; 8% Debentures of ₹ 100 each at a discount of 5% payable as 25% on application;20% on allotment and balance after three months.
Pass Journal entries.
Romi Ltd. acquired assets of ₹ 20 lakhs and took over creditors of ₹ 2 lakhs from Kapil Enterprises.
Romi Ltd. issued 8% Debentures of ₹ 100 each at a premium of 25% as purchase consideration.
Record necessary journal entries in the books of Romi Ltd.
Pass journal entries in the following cases:
(a) A Co.Ltd. issued ₹40,000; 12% Debentures at a premium of 5% redeemable at par.
(b) A Co.Ltd. issued ₹40,000; 12% Debentures at a discount of 10% redeemable at par.
(c) A Co.Ltd. issued ₹40,000; 12% Debentures at par redeemable at 10% premium.
(d) A Co.Ltd. issued ₹40,000; 12% Debentures at a discount of 5% and redeemable at 5% premium.
(e) A Co.Ltd. issued ₹40,000; 12% Debentures at a premium of 10% redeemable at 110%.
Pass necessary Journal entries relating to the issue of debentures for the following:
(a) Issued ₹ 28,000; 10% Debentures of ₹ 100 each at a premium of 15% redeemable at par.
(b) Issued ₹ 30,000; 10% Debentures of ₹ 100 each at a premium of 10% and redeemable at a premium of 15%.
(c) Issued ₹ 80,000; 10% Debentures of ₹ 100 each at par repayable at a premium of 10%.
Pass necessary Journal entries for the issue of debentures in the following cases:
- ₹ 40,000; 12% Debentures of ₹ 100 each issued at a premium of 5% redeemable at par.
- ₹ 70,000; 12% Debentures of ₹ 100 each issued at a premium of 5% redeemable at ₹ 110.
XYZ Ltd.issued 5,000 , 10% Debentures of ₹ 100 each on 1st April, 2015 at a discount of 10% redeemable at a premium of 10% after 4 years. Give journal entries for the year ended 31st March, 2016, assuming that the interest was payable half-yearly on 30th September and 31st March. Tax is to be deducted @ 10%.
Bright Ltd. issued 5,000; 10% Debentures of ₹ 100 each on 1st April, 2015 . The issue was fully subscribed . According to the terms of issue, interest on the debentures is payable half-yearly on 30th September and 31st March and the tax deducted at source is 10%.
Pass necessary journal entries related to the debenture interest for the year ending 31st March , 2016 and transfer of interest on debentures of the year to the Statement of Profit and Loss .
On 1st January, 2017, Raha Ltd. issued 6,000, 8% Debentures of nominal (face) value of ₹ 100 each redeemable at 5% premium in equal proportions at the end of 5, 10 and 15 years. It has a balance of ₹ 10,000 in Securities Premium Reserve.
Pass Journal entries. Also give Journal entries for writing off Loss on Issue of Debentures.
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 ______.
Loss on Issue of Debenture Account is shown:
Which of the following is true with regard to 10% Debentures issued at a discount of 20%?
Which of the following statement is true?
Loss on issue of debentures is treated as ______.
Maximum limit on premium on issue of debentures is ______.
MK Ltd. has outstanding Rs. 30,000 11% debentures of Rs. 100 each redeemable at 10% premium as follows:
| March 31, 2018 - | 10,000 debentures |
| March 31, 2019 - | 12,000 debentures |
| March 31, 2020 - | Remaining debentures |
Pass necessary journal entries in the books of the company.
