Question

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

Ninja Ltd. issued 32,000, 8% Debentures of ₹ 100 each at a premium of ₹ 20 per debenture, redeemable at a premium of ₹ 10 per debenture.

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c   ...Dr.		38,40,000
	To Debentures Application and Allotment A/c			38,40,000
	(Being application and allotment money received)
2.	Debentures Application and Allotment A/c   ...Dr.		38,40,000
	Loss on Issue of Debentures A/c   ...Dr.		3,20,000
	To 8% Debentures A/c			32,00,000
	To Securities Premium A/c			6,40,000
	To Premium on Redemption of Debentures A/c			3,20,000
	(Being debentures issued at a premium of ₹ 20 per debenture and redeemable at a premium of ₹ 10 per debenture)

Working note:

Face Value:

32,000 × ₹ 100 = ₹ 32,00,000

Premium on Issue:

32,000 × ₹ 20 = ₹ 6,40,000

Amount Received:

₹ 32,00,000 + ₹ 6,40,000 = ₹ 38,40,000

Premium on Redemption:

32,000 × ₹ 10 = ₹ 3,20,000

Loss on Issue of Debentures: ₹ 3,20,000