Advertisements
Advertisements
Question
Iron Products Ltd. issued 5,000; 9% Debentures of ₹ 100 each at a premium of ₹ 40 payable as follows;
(i) ₹ 40 , including premium of ₹ 10 on applications;
(ii) ₹ 45, including premium of ₹ 15 on allotment ; and
(iii) Balance as first and final call.
The issue was subscribed and allotment made. Calls were made and due amount was received .
Pass Journal entries .
Advertisements
Solution
Journal
|
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
|
Bank A/c (5,000×40) |
Dr. |
|
2,00,000 |
|
|
|
To Debenture Application A/c |
|
|
|
2,00,000 |
|
|
(Application money received) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debenture Application A/c |
Dr. |
|
2,00,000 |
|
|
|
To 9% Debentures A/c (5,000×30) |
|
|
|
1,50,000 |
|
|
To Security Premium Reserve A/c (5,000×10) |
|
|
|
50,000 |
|
|
(Application money adjusted) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debenture Allotment A/c (5,000×45) |
Dr. |
|
2,25,000 |
|
|
|
To 9% Debentures A/c (5,000×30) |
|
|
|
1,50,000 |
|
|
To Security Premium Reserve A/c (5,000×15) |
|
|
|
75,000 |
|
|
(Allotment money due) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c (5,000×45) |
Dr. |
|
2,25,000 |
|
|
|
To Debenture Allotment A/c |
|
|
|
2,25,000 |
|
|
(Allotment money received) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debenture First and Final call A/c (5,000×55) |
Dr. |
|
2,75,000 |
|
|
|
To 9% Debentures A/c (5,000×40) |
|
|
|
2,00,000 |
|
|
To Security Premium Reserve A/c (5,000×15) |
|
|
|
75,000 |
|
|
(First call money due) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
2,75,000 |
|
|
|
To Debenture Final and Final call A/c |
|
|
|
2,75,000 |
|
|
(First Call money Received) |
|
|
|
|
RELATED QUESTIONS
What is ‘Capital Reserve’?
What is meant by an ‘Irredeemable Debenture’?
Short Answer Question
Name the head under which ‘discount on issue of debentures’ appears in the Balance Sheet of a company.
Wye Ltd . purchased an established business for ₹ 2,00,000 payable as ₹ 65,000 by cheque and the balance by issuing 9% Debentures of ₹ 100 each at a discount of 10%.
Give journal entries in the books of Wye Ltd.
Bright Ltd. took over the assets of ₹ 6,60,000 and liabilities of ₹ 80,000 of Star Ltd. for an agreed purchase consideration of ₹ 6,00,000 payable 10% in cash and the balance by the issue of 12% Debentures of ₹ 100 each. Give necessary Journal entries in the books of Bright Ltd., assuming that:
Case (a): The debentures are issued at par.
Case (b): The debentures are issued at 20% premium.
Case (c): The debentures are issued at 10% discount.
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.
'Sangam Woollens Ltd.', Ludhiana, are the manufacturers and exporters of woollen garments. The company decided to distribute free of cost woollen garments to 10 villages of Lahaul and Spiti District of Himachal Pradesh. The company also decided to employ 50 young persons from these villages in its newly established factory. The company issued 40,000 Equity Shares of ₹ 10 each and 1,000, 9% Debentures of ₹ 100 each to the vendor for the purchase of machinery of ₹ 5,00,000. Pass necessary Journal entries.
Bright Ltd. issued 5,000; 10% Debentures of ₹ 100 each on 1st April, 2015 . The issue was fully subscribed . According to the terms of issue, interest on the debentures is payable half-yearly on 30th September and 31st March and the tax deducted at source is 10%.
Pass necessary journal entries related to the debenture interest for the year ending 31st March , 2016 and transfer of interest on debentures of the year to the Statement of Profit and Loss .
On 1st April, 2025, Solar Power Ltd. issued 10,000, 8% Debentures of ₹ 100 each at a discount of 5% redeemable at a premium of 15% at the end of five years. All the debentures were subscribed and allotment was made.
The company had balance in Securities Premium of ₹ 80,000.
Prepare the Balance Sheet (extract) as at 31st March, 2026.
Debentures which are transferable by mere delivery are ______.
Which of the following given statement is correct.
Statement 1 - "Debenture is written instrument acknowledging a debt under the common seal of the company"
Statement 2 - Debenture is oral instrument acknowledging a debt under the common seal of the company"
The debentures are issued with a specified rate of interest, which is called the coupon rate are known as which types of debentures?
The loss on issue of Debentures is written-off from ______.
Assertion (A): Debentures saves income tax.
Reason (R): Interest on debenture is tax deductible expenditure.
Which of the following is not a characteristic of Bearer Debentures?
A Ltd. took over the assets of ₹ 6,60,000 and liabilities of ₹ 80,000 of B Ltd. for an agreed purchase consideration of ₹ 6,00,000 payable 10% in cash and the balance by the issue of 15% debentures of ₹ 100 each at 10% discount. The number of debentures to be issued is:
Assertion (A): Sarita Pvt. Ltd. issued 15% 10,000 debentures at par @ ₹ 100 per debenture. The company suffered a loss but still the directors of the company paid interest on debentures.
Reason (R): Interest on debenture is a charge against profits and therefore, its payment is not subject to the earning of profit.
Debenture is ______.
A company can issue debentures:
