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Question
Pass the necessary Journal entries of the issues and redemption of Debentures in the following cases:
(i) 10,000, 10% Debentures of Rs 120 each issued at 5% premium, repayable at par.
(ii) 20,000, 9% Debentures of Rs 200 each issued at 20% premium, repayable at 30% premium.
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Solution
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Journal |
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Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
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(i) |
At the time of Issue of Debentures |
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Bank A/c (10,000 debentures × Rs 126) |
Dr. |
|
12,60,000 |
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|
To 10% Debentures Application A/c |
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12,60,000 |
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(Application money received) |
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10% Debentures Application A/c (10,000 debentures × Rs 126) |
Dr. |
|
12,60,000 |
|
|
|
To 10% Debentures A/c (10,000 debentures × Rs 6) |
|
|
12,00,000 |
|
|
|
To Securities Premium A/c (10,000 debentures × Rs 120) |
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60,000 |
|
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|
(Issue of 10% Debentures at 5% premium and repayable at par) |
|
|
|
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At the time of Redemption |
|
|
|
|
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|
10% Debentures A/c |
Dr. |
|
12,00,000 |
|
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|
To Debenturesholders’ A/c |
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12,00,000 |
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(Amount due to debenturesholders) |
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Debenturesholders’ A/c |
Dr. |
|
12,00,000 |
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To Bank A/c |
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12,00,000 |
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(Amount paid to debenturesholders) |
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(ii) |
At the time of Issue of Debentures |
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Bank A/c (20,000 debentures × Rs 240) |
Dr. |
|
48,00,000 |
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To 9% Debentures Application A/c |
|
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48,00,000 |
|
|
|
(Application money received) |
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9% Debentures Application A/c (20,000 debentures × Rs 240) |
Dr. |
|
48,00,000 |
|
|
|
Loss on Issue of Debentures A/c (20,000 debentures × Rs 60) |
Dr. |
|
12,00,000 |
|
|
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To 9% Debentures A/c (20,000 debentures × Rs 200) |
|
|
40,00,000 |
|
|
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To Securities Premium A/c (20,000 debentures × Rs 40) |
|
|
8,00,000 |
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|
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To Premium on Redemption on Debentures A/c (20,000 debentures × Rs 60) |
|
|
12,00,000 |
|
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|
(Issue of 9% Debentures at 20% premium repayable at 30% premium) |
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|
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At the time of Redemption |
|
|
|
|
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|
9% Debentures A/c |
Dr. |
|
40,00,000 |
|
|
|
Premium on Redemption of Debentures A/c |
Dr. |
|
12,00,000 |
|
|
|
To Debentureholders A/c |
|
|
52,00,000 |
|
|
|
(Amount due to debenturesholders) |
|
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|
Debentureholders A/c |
Dr. |
|
52,00,000 |
|
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To Bank A/c |
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52,00,000 |
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(Amount paid to debentures holders on redemption) |
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