Question

GT Ltd. issued 5,000; 8% Debentures of ₹ 100 each at a premium of 5% payable as follows:

₹ 10 on application; ₹ 20 plus premium on allotment and balance on first and final call.

Pass necessary Journal entries.

Answer 1

Journal Entries In the Books of GT Ltd.
Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
1.	Bank A/c   ...Dr.		50,000
	To Debentures Application A/c			50,000
	(Application money received on 5,000 debentures)
2.	Debentures Application A/c   ...Dr.		50,000
	To 8% Debentures A/c			50,000
	(Application money transferred to Debentures A/c)
3.	Debentures Allotment A/c   ...Dr.		1,25,000
	To 8% Debentures A/c			1,00,000
	To Securities Premium A/c			25,000
	(Allotment money due including premium @ ₹ 5 per debenture)
4.	Bank A/c   ...Dr.		1,25,000
	To Debentures Allotment A/c			1,25,000
	(Allotment money received)
5.	Debentures First and Final Call A/c   ...Dr.		3,50,000
	To 8% Debentures A/c			3,50,000
	(First and final call money due @ ₹ 70 per debenture)
6.	Bank A/c   ...Dr.		3,50,000
	To Debentures First and Final Call A/c			3,50,000
	(First and final call money received)

Working note:

Face value of debentures:

5,000 × ₹ 100 = ₹ 5,00,000

Premium @ 5%:

5,000 × ₹ 5 = ₹ 25,000

Application money:

5,000 × ₹ 10 = ₹ 50,000

Allotment money:

₹ 20 + ₹ 5 premium = ₹ 25

5,000 × ₹ 25 = ₹ 1,25,000

First and Final Call:

₹ 100 − ₹ 10 − ₹ 20 = ₹ 70

5,000 × ₹ 70 = ₹ 3,50,000