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Question
On 1st April, 2023, Ruth Ltd. purchased Plant and Machinery for ₹ 11,00,000 from Pablo Ltd. payable as to ₹ 1,00,000 by accepting a promissory note and the balance by an issue of 11% Debentures of ₹ 100 each at a premium of 10% to be redeemed at a premium of 2 % after six years. You are required to pass journal entries in the books of Ruth Ltd. only to record the payment made to Pablo Ltd.
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Solution
| In the Books of Ruth Ltd. | ||||
| Journal Entries | ||||
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| 1. | Pablo Ltd. A/c ...Dr. | 1,00,000 | - | |
| To Bills Payable A/c | - | 1,00,000 | ||
| (Being part payment made by accepting a bill of exchange) | ||||
| 2. | Pablo Ltd. A/c ...Dr. | 10,00,000 | - | |
| Loss on issue of Debentures A/c ...Dr. | 18,180 | - | ||
| To 11% Debentures A/c | - | 9,09,000 | ||
| To Securities Premium A/c | - | 90,900 | ||
| To Premium on Redemption of Debentures A/c | - | 18,180 | ||
| To Bank A/c | - | 100 | ||
| (Being 9,090, 11% Debentures issued at a premium of 10%) | ||||
Working Notes:
No. of Debentures = `(10,00,000)/110` = 9090.9090
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What is meant by ‘Premium on Redemption of debentures?
On 1st April, 2012, Neptune Finance Company (a listed NBFC) issued 4,000, 9% Debentures of ₹ 100 each to be redeemed at a premium of 5% on 31st March, 2021.
You are required to pass necessary journal entries for the issue and redemption of debentures.
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As per Companies Act 2013, Securities Premium Balance can be utilised for which of the following purpose?
Pass necessary journal entries for the issue of debentures in the following cases:
- Issued 5,000, 9% debentures of ₹ 100 each at a discount of 10% redeemable at a premium of 5% after 5 years.
- Issued 30,000, 12% debentures of ₹ 100 each at a premium of 5% and redeemable at par after 5 years.
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At what rate of discount did the company issue these Debentures?
