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Question
Madhur Ltd. has outstanding 9% debentures of Rs. 50,00,000 redeemable at par on January 01, 2020. Debenture Redemption Reserve of Rs. 2,00,000 on March 31, 2018 and balance of the required amount of DRR was created on March 31, 2019. The company invested in specified securities (DRI) the required amount on April 01, 2019. Debentures were redeemed on the due date. Record necessary journal entries in the books of the company and also prepare the ledger accounts (ignore interest).
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Solution
| In the books of Madhur limited | ||||
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
| 1. | 9% Debenture A/c ...Dr. | 5,00,000 | ||
| To Debenture holder A/c | 5,00,000 | |||
| (Being amount transfer to Debenture holder) | ||||
| 2. | Debenture holder A/c ...Dr. | 5,00,000 | ||
| To Bank A/c | 5,00,000 | |||
| (Being amount paid to debenture holder) | ||||
| 9% Debenture A/c | |||||
| Date | Particulars | Amount (Rs.) | Date | Particulars | Amount (Rs.) |
| Debenture holder | 5,00,000 | By Balance b/d | 5,00,000 | ||
| 5,00,000 | 5,00,000 | ||||
| Debenture holder A/c | |||||
| Date | Particulars | Amount (Rs.) | Date | Particulars | Amount (Rs.) |
| Date of red. | To Bank | 5,00,000 | Date of red. | By 9% Debenture | 5,00,000 |
| 5,00,000 | 5,00,000 | ||||
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Long Answer Question
How is ‘Discount on Issue of Debentures’ treated in the books of accounts? How will you deal with the ‘discount in issue of debentures’ when the debentures are to be redeemed in instalments?
A.Ltd. issued 50,00,000, 8% Debenture of Rs 100 at a discount of 6% on April 01, 2009 redeemable at premium of 4% by draw of lots as under:
20,00,000 Debentures on March, 2011
10,00,000 Debentures on March, 2013
20,00,000 Debentures on March, 2014
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Pass journal entry.
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Which of the following given statement is correct.
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Statement 2 - Debenture is oral instrument acknowledging a debt under the common seal of the company"
Pick the odd one out:
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Loss on issue of debentures is treated as ______.
A company can issue debentures:
Premium received on issue of debentures may be utilised for:
