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A Company Took a Loan of ₹ 4,00,000 from Bandhan Bank Ltd. and Issued 8% Debentures of ₹ 4,00,000 as a Collateral Security. - Accountancy

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Question

A company took a loan of  ₹ 4,00,000 from Bandhan Bank Ltd. and issued  8% Debentures of  ₹ 4,00,000 as a collateral security.

Solution

When Debentures Issued as Collateral Security are shown separately 

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

Bank A/c

Dr.

 

4,00,000

 

 

To Loan from Bandhan Bank Ltd.

 

 

4,00,000

 

(Loan taken against issuing 8% Debentures as collateral security)

 

 

 

 

 

 

 

 

 

Debenture Suspense A/c

Dr.

 

4,00,000

 

 

To 8% Debenture A/c

 

 

4,00,000

 

(Debentures issued as collateral security)

 

 

 

Posting in the Company's Balance Sheet (When Debentures Issued as Collateral Security are shown separately

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I Equity and Liabilities

 

 

1.Shareholders’ Funds

 

 

2.Non-Current Liabilities

 

 

a. Long-Term Borrowings

1

4,00,000

3.Current Liabilities

 

 

Total

 

4,00,000

II Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

4,00,000

Total

 

4,00,000

NOTES TO ACCOUNTS 

Note No.

Particulars

Amount

(Rs)

1

Long-Term Borrowings

 

 

Secured:

 

 

Loan from Bandhan Bank (Secured by issue of  Debentures of Rs 4,00,000)

4,00,000

 

8% Debentures (Issued as Collateral Security to Bank against Loan)

 

4,00,000

 

 

-

 

Less: Debenture Suspense Account

4,00,000

 

 

4,00,000

2

Cash and Cash Equivalents

 

 

Cash at Bank

4,00,000

Alternative Method: When debentures Issued as Collateral Security are not shown separately 

 

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

Bank A/c

Dr.

 

4,00,000

 

 

To Loan From Bandhan Bank Ltd.

 

 

4,00,000

 

(Loan taken from Bandhan Bank secured by issuing Debentures as collateral security)

 

 

 

(When Debentures Issued as Collateral Security are not shown separately) 

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

2. Non-Current Liabilities

 

 

a. Long-Term Borrowings

1

4,00,000

3. Current Liabilities

 

 

Total

 

4,00,000

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

4,00,000

Total

 

4,00,000

NOTES TO ACCOUNTS

Note No.

Particulars

Amount

(Rs)

1

Long-Term Borrowings

 

 

Secured:

 

 

Loan from Bandhan Bank (Secured by issue of  8% Debentures of Rs 4,00,000 as Collateral Security)

 

4,00,000

2

Cash and Cash Equivalents

 

 

Cash at Bank 

4,00,000

  Is there an error in this question or solution?
Solution A Company Took a Loan of ₹ 4,00,000 from Bandhan Bank Ltd. and Issued 8% Debentures of ₹ 4,00,000 as a Collateral Security. Concept: Debentures as Collateral Security-concept.
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