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Question
Garvit Ltd. invited applications for issuing 3,000, 11% Debentures of ₹ 100 each at a discount of 6%. The full amount was payable on application. Applications were received for 3,600 debentures. Applications for 600 debentures were rejected and the application money was refunded. Debentures were allotted to the remaining applicants. Pass the necessary journal entries for the above transactions in the books of Garvit Ltd.
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Solution
Journal of Garvit Ltd.
| Date | Particulars | L.F. |
Dr. Amount (₹) |
Cr. Amount (₹) |
|
| Bank A/c (94 × 3,600) | Dr. |
3,38,400 |
|||
| To Debenture Application & Allotment A/c |
3,38,400 |
||||
| (Being application money received on 3,600 debentures at a discount of 6%) | |||||
| Debenture Application & Allotment A/c | Dr. |
3,38,400 |
|||
| Discount on issue of Debentures A/c | Dr. | 18,000 | |||
| To 11% Debentures A/c | 3,00,000 | ||||
| To Bank A/c (94 × 600) | 56,400 | ||||
| (Being application money transferred to 11% Debentures and excess refunded) |
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Long Answer Question
Explain the different terms for the issue of debentures with reference to their redemption.
Green Ltd. purchased the assets of Strong Ltd. for ₹ 40,00,000 and took over liabilities of 7,00,000 at an agreed value of ₹ 32,40,000. Payment was made by issuing 10% Debentures of 100 each at a discount of 10%. Pass the necessary Journal entries in the books of Green Ltd.
Exe Ltd. purchased the assets of the book value ₹4,00,000 and took over the liabilities of ₹ 50,000 from Mohan Bros.It was agreed that the purchase consideration ,settled at ₹3,80,000 be paid by issuing debentures of ₹ 100 each.
Pass journal entries if debenture are issued:
(a) at par
(b) at a discount of 10% and
(c) at a premium of 10%.
It was agreed that any fraction of debentures be paid in cash.
Pass necessary Journal entries for the issue of Debentures in the following cases:
(a) ₹ 40,000; 15% Debentures of ₹ 100 each issued at a discount of 10% redeemable at par.
(b) ₹ 80,000; 15% Debentures of ₹ 100 each issued at a premium of 10% redeemable at a premium of 10%.
Global Ltd. issued 10,000, 8% Debentures of ₹ 100 each redeemable in four equal instalments by draw of lots from the end of 3 years at a premium of ₹ 9.
Pass the Journal entries for writing off the Loss on Issue of Debentures. Also prepare Loss on issue of Debentures Account.
Fill in the blank.
For recording the issue of debentures as collateral security by a journal entry _______ account is debited.
Premium on redemption is shown under which head until debentures are redeemed?
Which of the following given statement is correct.
Statement 1 - "Shares cannot be converted into debentures whereas debentures can be converted into shares"
Statement 2 - "Shares can be converted into debentures whereas debentures cannot be converted into shares"
Debenture is ______.
Premium received on issue of debentures may be utilised for:
