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Question
Pass necessary Journal entries for the issue of Debentures in the following cases:
(a) ₹ 40,000; 15% Debentures of ₹ 100 each issued at a discount of 10% redeemable at par.
(b) ₹ 80,000; 15% Debentures of ₹ 100 each issued at a premium of 10% redeemable at a premium of 10%.
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Solution
(a)
Journal
|
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
||
|
|
Bank A/c |
Dr. |
|
36,000 |
|
|
|
|
To Debenture Application A/c |
|
|
|
36,000 |
|
|
|
(400 debentures issued at Rs 100 at discount of 10%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debenture Application A/c |
Dr. |
|
36,000 |
|
|
|
|
Discount on Issue of Debentures A/c |
Dr. |
|
4,000 |
|
|
|
|
To 15% Debenture A/c |
|
|
|
40,000 |
|
|
|
(400 debentures issued at discount and redeemable at a par ) |
|
|
|
|
|
(b)
Journal
|
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
||
|
|
Bank A/c |
Dr. |
|
88,000 |
|
|
|
|
To Debenture Application A/c |
|
|
|
88,000 |
|
|
|
(800 debentures issued at Rs 100 at a premium of 10%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debenture Application A/c |
Dr. |
|
88,000 |
|
|
|
|
Loss on Issue of Debentures A/c |
Dr. |
|
8,000 |
|
|
|
|
To 15% Debenture A/c |
|
|
|
80,000 |
|
|
|
To Premium on Redemption A/c |
|
|
|
8,000 |
|
|
|
To Securities Premium A/c |
|
|
|
8,000 |
|
|
|
(800 debentures issued at a premium of 10% and redeemable at a premium of 10%) |
|
|
|
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|
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RELATED QUESTIONS
Short Answer Question
What is meant by ‘Issue of debentures for Consideration other than Cash’?
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Name the head under which ‘discount on issue of debentures’ appears in the Balance Sheet of a company.
Long Answer Question
Describe the meaning of ‘Debenture Issued as Collateral Securities’. What accounting treatment is given to the issue of debentures in the books of accounts?
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Exe Ltd. purchased the assets of the book value ₹4,00,000 and took over the liabilities of ₹ 50,000 from Mohan Bros.It was agreed that the purchase consideration ,settled at ₹3,80,000 be paid by issuing debentures of ₹ 100 each.
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(c) at a premium of 10%.
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On 1st June, 2017, R Energy Ltd. issued 10,000, 7% Debentures of ₹ 100 each at a discount of 10% redeemable at a premium of 10% at the end of five years. All the debentures were subscribed and allotment was made.
Prepare the Balance Sheet (extract) as at 31st March, 2018.
Garvit Ltd. invited applications for issuing 3,000, 11% Debentures of ₹ 100 each at a discount of 6%. The full amount was payable on application. Applications were received for 3,600 debentures. Applications for 600 debentures were rejected and the application money was refunded. Debentures were allotted to the remaining applicants. Pass the necessary journal entries for the above transactions in the books of Garvit Ltd.
Debentures which are transferable by mere delivery are ______.
When debentures are issued at a discount and are redeemable at a premium, which of the following accounts is debited at the time of issue?
The word 'debenture' has been derived from which Latin word (which means to borrow)?
Loss on Issue of Debenture Account is shown:
Debenture interest is paid as ______.
Interest on Debentures is a charge against ______.
Assertion (A): Debentures saves income tax.
Reason (R): Interest on debenture is tax deductible expenditure.
Which of the following is false with respect to debentures ?
Debenture is ______.
XYZ Ltd. Issued 6,000, 12% Debentures of ? 50 each on April 1, 2014. Interest on these debenture is payable annually 3151 March each year. The debentures are redeemable in four equal installments at end of third, fourth, fifth and sixth year. You are required to pan journal entries at the time of issue and redemption of debentures in the books of the company under following cases:
- Debentures are issued at par and redeemable at par.
- Debentures are issued at a premium of 10% and redeemable at par.
- Debentures are issued at a discount of 10% and redeemable at par.
- Debenture are issued at par but redeemable at a premium of 10%.
- Debentures are issued at a premium of 10% and redeemable at premium of 10%.
- Debenture are issued at a discount of 10% and redeemable at a premium of 10%.
