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Best Barcode Ltd. Took a Loan of ₹ 5,00,000 from a Bank Giving ₹ 6,00,000; 9% Debentures as Collateral Security. - Accountancy

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Question

Best Barcode Ltd. took a loan of  ₹ 5,00,000 from a bank giving  ₹ 6,00,000; 9% Debentures as collateral security. Pass journal entries regarding issue of debentures , if any, and show this loan in the Balance Sheet of the company.

Solution

Best Barcode Ltd.
Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

2. Non-Current Liabilities

 

 

a. Long-Term Borrowings

1

5,00,000

3. Current Liabilities

 

 

Total

 

5,00,000

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

5,00,000

Total

 

5,00,000

NOTES TO ACCOUNTS 

Note No.

Particulars

Amount

(Rs)

1

Long-Term Borrowings

 

 

Loan (Secured by issue of  9% Debentures of Rs 6,00,000 as Collateral Security)

 

5,00,000

2

Cash and Cash Equivalents

 

 

Cash at Bank

5,00,000

 

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

Bank A/c

Dr.

 

5,00,000

 

 

To Loan A/c

 

 

5,00,000

 

(Loan taken against issuing 9% Debentures as collateral Security)

 

 

 

Alternative Method  

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

Bank A/c

Dr.

 

5,00,000

 

 

To Loan A/c

 

 

5,00,000

 

(Loan taken against issuing 9% debentures as collateral Security)

 

 

 

 

 

 

 

 

 

Debenture Suspense A/c

Dr.

 

6,00,000

 

 

To 9% Debentures A/c

 

 

6,00,000

 

(Issued 9% Debentures of Rs 6,00,000 as collateral security)

 

 

 

Posting in the Company's Balance Sheet

Best Barcode Ltd.
Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

2. Non-Current Liabilities

 

 

a. Long-Term Borrowings

1

5,00,000

3. Current Liabilities

 

 

Total

 

5,00,000

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

5,00,000

Total

 

5,00,000

NOTES TO ACCOUNTS 

Note No.

Particulars

Amount

(Rs)

1

Long-Term Borrowings

 

 

Secured:

 

 

Loan (Secured by issue of  9% Debentures of

Rs 6,00,000 as Collateral Security)

 

5,00,000

 

9% Debentures (Issued as Collateral Security to Bank against loan)

 

6,00,000

 

 

-

 

Less: Debenture Suspense Account

6,00,000

 

 

5,00,000

2

Cash and Cash Equivalents

  

 

Cash at Bank

5,00,000

  Is there an error in this question or solution?
Solution Best Barcode Ltd. Took a Loan of ₹ 5,00,000 from a Bank Giving ₹ 6,00,000; 9% Debentures as Collateral Security. Concept: Debentures as Collateral Security-concept.
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