Question

Pass the necessary journal entries for the issue and redemption of Debentures in the following cases:

(i) 15,000, 9% Debentures of Rs 250 each issued at 5% premium, repayable at 15% premium.

(ii) 2,00,000, 12% Debentures of Rs 10 each issued at 8% premium, repayable at par.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
(i)	For Issue of Debentures
	Bank A/c	Dr.		39,37,500
	To Debentures Application A/c				39,37,500
	(Debenture Application money received for 15,000 9% Debentures of Rs 250 each with premium of Rs 12.5 per debentures)
	Debentures Application A/c	Dr.		39,37,500
	Loss on Issue of Debentures A/c	Dr.		5,62,500
	To 9% Debentures A/c				37,50,000
	To Securities Premium A/c				1,87,500
	To Premium on Redemption of Debentures A/c				5,62,500
	(15,000 9% Debentures of 250 each issued at a premium of 5% which are to repaid at 15% premium)
	At the time of Redemption
	9% Debentures A/c	Dr.		37,50,000
	Premium on Redemption of Debentures A/c	Dr.		5,62,500
	To Debentureholders’ A/c				43,12,500
	(15,000 9% Debentures due for redemption)
	Debentureholders’ A/c	Dr.		43,12,500
	To Bank A/c				43,12,500
	(Payment of debentures made to debentureholders)
(ii)	For Issue of Debentures
	Bank A/c	Dr.		21,60,000
	To Debenture Application A/c				21,60,000
	(Application money received for 2,00,000 12% Debentures at Rs 10 each at 8% premium)
	Debenture Application A/c	Dr.		21,60,000
	To 12% Debentures A/c				20,00,000
	To Securities Premium A/c				1,80,000
	(2,00,000 12% Debentures of Rs 10 each issued at premium of 8%)
	For Redemption of Debentures
	12% Debentures A/c	Dr.		20,00,000
	To Debenturesholders’ A/c				20,00,000
	(2,00,000 12% Debentures of Rs 10 each due for redemption)
	Debentureholders’ A/c	Dr.		20,00,000
	To Bank A/c				20,00,000
	(Payment made to Debenturesholders)