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Iron Products Ltd. Issued 5,000; 9% Debentures of ₹ 100 Each at a Premium of ₹ 40 Payable as Follows;

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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 .

Journal Entry
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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)

 

 

 

 

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Chapter 9: Issue of Debentures - Exercise [Page 52]

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