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Question
Pass necessary journal entries for the issue of debentures in the following cases :
- Issued ₹ 75,00,000, 9% debentures of ₹100 each at a premium of 10% redeemable at a premium of 5% after 3 years.
- Issued 8,000, 9% debentures of ₹100 each at a discount of 6% redeemable at a premium of 3% after 5 years.
- Issued 90,000, 9% debentures of ₹100 each at par, redeemable at par after 4 years.
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Solution
| Journal Entry | ||||
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| (i) | Bank A/c ...Dr. | 82,50,000 | ||
| To Debenture Application & Allotment A/c | 82,50,000 | |||
| (Being amount received on 75,000 debentures @ 100/- each at a premium of 10%) | ||||
| Debenture Application & Allotment A/c ...Dr. | 82,50,000 | |||
| Loss on Issue of Debentures A/c ...Dr. | 3,75,000 | |||
| To 9% Debenture A/c | 75,00,000 | |||
| To Premium on Redemption of Debenture A/c | 3,75,000 | |||
| To Securities Premium Reserve A/c | 7,50,000 | |||
| (Being debenture issued to debenture A/c and redemption is at premium @ 5%) | ||||
| (ii) | Bank A/c (8,000 × 94) ...Dr. | 7,52,000 | ||
| To Debenture Application & Allotment A/c | 7,52,000 | |||
| (Being 8,000 debenture issued @ ₹94) | ||||
| Debenture Application & Allotment A/c ...Dr. | 7,52,000 | |||
| Loss on Issue of Debenture A/c ...Dr. | 72,000 | |||
| To 9% Debentures A/c | 8,00,000 | |||
| To Premium on Redemption of Debenture A/c | 24,000 | |||
| (Being 6% discount and 30% premium on redemption accounted for) | ||||
| (iii) | Bank A/c ...Dr. | 90,00,000 | ||
| To Debenture Application & Allotment A/c | 90,00,000 | |||
| (Being 90,000 debenture issued at ₹ 100) | ||||
| Debenture Application & Allotment A/c ...Dr. | 90,00,000 | |||
| To 9% Debentures A/c | 90,00,000 | |||
| (Being debenture money transfer to debentures account) | ||||
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| Particulars | (₹) | Particulars | (₹) |
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