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Question
Grown Ltd. issued 500, 10% Debentures of ₹ 1,000 each credited as fully paid-up to the promoters for their services to incorporate the company. It also issued 100, 10% Debentures of ₹ 1,000 each credited as fully paid-up to the underwriters towards their commission. Pass the Journal entries.
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Solution
In the books of Grown Ltd.
Journal
|
Date |
Particulars |
|
L.F. |
Debit |
Credit |
|
|
Incorporation Expenses A/c |
Dr. |
5,00,000 |
|
|
|
|
To Promoters A/c |
|
|
5,00,000 |
|
|
|
(Being amount due to promoters for their services) |
|
|
|
|
|
|
|
|
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||
|
|
Promoters A/c |
Dr. |
5,00,000 |
|
|
|
|
To 10% Debentures A/c (500 × 1,000) |
|
|
5,00,000 |
|
|
|
(Being 500, 10% debentures issued as purchase consideration) |
|
|
|
|
|
|
|
|
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||
|
|
Underwriting Commission A/c |
Dr. |
1,00,000 |
|
|
|
|
To Underwriters A/c |
|
|
1,00,000 |
|
|
|
(Being amount due to underwriters for their services) |
|
|
|
|
|
|
|
|
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||
|
|
Underwriters A/c |
Dr. |
1,00,000 |
|
|
|
|
To 10% Debentures A/c (100 × 1,000) |
|
|
1,00,000 |
|
|
|
(Being 100, 10% debentures issued as purchase consideration) |
|
|
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||
|
|
Statement of Profit and Loss A/c |
Dr. |
6,00,000 |
|
|
|
|
To Incorporation Expenses A/c |
|
|
5,00,000 |
|
|
|
To Underwriting Commission A/c |
|
|
1,00,000 |
|
|
|
(Being expenses transferred to statement of profit and loss at the end of year) |
|
|
|
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RELATED QUESTIONS
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Pick the odd one out.
Loss on issue of debentures is treated as ______.
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XYZ Ltd. Issued 6,000, 12% Debentures of ? 50 each on April 1, 2014. Interest on these debenture is payable annually 3151 March each year. The debentures are redeemable in four equal installments at end of third, fourth, fifth and sixth year. You are required to pan journal entries at the time of issue and redemption of debentures in the books of the company under following cases:
- Debentures are issued at par and redeemable at par.
- Debentures are issued at a premium of 10% and redeemable at par.
- Debentures are issued at a discount of 10% and redeemable at par.
- Debenture are issued at par but redeemable at a premium of 10%.
- Debentures are issued at a premium of 10% and redeemable at premium of 10%.
- Debenture are issued at a discount of 10% and redeemable at a premium of 10%.
