Question

Pass necessary Journal entries for the issue of debentures for the following transaction:

Him Ltd. issued 40,000, 13% Debentures of ₹ 100 each at par, redeemable at a premium of 10%.

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c   ...Dr.		40,00,000
	To Debentures Application and Allotment A/c			40,00,000
	(Being application and allotment money received)
2.	Debentures Application and Allotment A/c   ...Dr.		40,00,000
	Loss on Issue of Debentures A/c   ...Dr.		4,00,000
	To 13% Debentures A/c			40,00,000
	To Premium on Redemption of Debentures A/c			4,00,000
	(Being debentures issued at par and redeemable at 10% premium)

Working Note:

Face Value:

40,000 × ₹ 100 = ₹ 40,00,000

Amount Received: ₹ 40,00,000

Premium on Redemption:

₹ 40,00,000 × 10% = ₹ 4,00,000

Loss on Issue of Debentures: ₹ 4,00,000