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Pass Necessary Journal Entries in the Following Cases : I. Z Ltd Redeemed 1500, 12% Debentures of Rs.100 Each Issued at a Discount of 6% by Converting Them into Equity Shares of Rs.100 Each Issued at a Premium of Rs.25 per Share. - Accountancy

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Pass necessary journal entries in the following cases :

i. Z Ltd redeemed 1500, 12% debentures of Rs.100 each issued at a discount of 6% by converting them into equity shares of Rs.100 each issued at a premium of Rs.25 per share.

ii. X Ltd. converted 1,000, 12% debentures of Rs.100 each issued at a discount of Rs.10 per debenture into equity shares of Rs.100 each Rs.90 paid up.

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Solution

                                                                                        Z Ltd.

                                                                                       Journal

Date Particulars L.F. Debit (Rs.) Credit (Rs.)
 

12% Debenture A/c                                                                                                          Dr

            To Debenture holder A/c

            To Discount on issue of debenture A/c

(Being 1,500 12% debenture of Rs.100 each issue at a discount of 6% due for redemption)

 

Debenture A/c                                                                                                                  Dr

              To Equity share capital A/c

              To Securities premium A/c

(1,128 equity share of Rs.100 each issued at premium of 25% debenture holders)

 

1,50,000

 

 

 

 

1,41,000

 

 

 

 

1,41,000

9,000

 

 

 

1,12,800

28,200

 

Working Note:

`"Number of share to be issued =""Amount Payable"/"Issue Price"=141000/125=1128" Shares"`

 

 

                                                                                              X Ltd.

                                                                                             Journal

Date Particulars L.F. Debit (Rs.) Credit (Rs.)
 

12% Debenture A/c                                                                                                            Dr

             To Debenture holder A/c

             To Discount on issue of debenture A/c

(Being 1,000 12% debenture of Rs.100 each issue at a discount of 6% due for redemption)

 

Debenture A/c                                                                                                                    Dr

Discount on issue A/c                                                                                                          Dr

               To Equity share capital A/c

(1,000 equity share of Rs.100 each issued at premium of 10 debenture holders)

 

1,00,000

 

 

 

 

90,000

10,000

 

 

 

90,000

10,000

 

 

 

 

1,00,000

 

Working Note:

`"Number of share to be issued =""Amount Payable"/"Issue Price"=90000/(100-10)=90000/90=1000" Shares"`

 

 

Concept: Accounting for Debentures - Conversion Method
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