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Question
Pass necessary Journal entries relating to the issue of debentures for the following:
(a) Issued ₹ 4,00,000; 9% Debentures of ₹ 100 each at a premium of 8% redeemable at 10% premium.
(b) Issued ₹ 6,00,000; 9% Debentures of ₹ 100 each at par, repayable at a premium of 10%.
(c) Issued ₹ 10,00,000; 9% Debentures of ₹ 100 each at a premium of 5%, redeemable at par.
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Solution
Journal
|
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
(a) |
Bank A/c |
Dr. |
|
4,32,000 |
|
|
|
To Debenture Application and Allotment A/c |
|
|
|
4,32,000 |
|
|
(Application money received on 4,000 9% Debentures) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debenture Application and Allotment A/c |
Dr. |
|
4,32,000 |
|
|
|
Loss on Issue of Debenture A/c |
Dr. |
|
40,000 |
|
|
|
To 9% Debentures A/c |
|
|
|
4,00,000 |
|
|
To Securities Premium Reserve A/c |
|
|
|
32,000 |
|
|
To Premium on Redemption of debentures A/c |
|
|
|
40,000 |
|
|
(4,000; 9% Debentures issued at a premium of Rs 8 and redeemable at premium of 10%) |
|
|
|
|
|
|
|
|
|
|
|
|
(b) |
Bank A/c |
Dr. |
|
6,00,000 |
|
|
|
To Debenture Application and Allotment A/c |
|
|
|
6,00,000 |
|
|
(Application money received on 6,000 9% Debentures) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debenture Application and Allotment A/c |
Dr. |
|
6,00,000 |
|
|
|
Loss on Issue of Debenture A/c |
Dr. |
|
60,000 |
|
|
|
To 9% Debentures A/c |
|
|
|
6,00,000 |
|
|
To Premium on Redemption of Debentures A/c |
|
|
|
60,000 |
|
|
(6,000; 9% Debentures issued at par and redeemable at premium of 10%) |
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
Bank A/c |
Dr. |
|
10,50,000 |
|
|
|
To Debenture Application and Allotment A/c |
|
|
|
10,50,000 |
|
|
(Application money received on 10,000 9%Debentures) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debenture Application and Allotment A/c |
Dr. |
|
10,50,000 |
|
|
|
To 9% Debentures A/c |
|
|
|
10,00,000 |
|
|
To Securities Premium Reserve A/c |
|
|
|
50,000 |
|
|
(1,000; 9% Debentures issued at a premium of Rs 5) |
|
|
|
|
APPEARS IN
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Discount on issue of debentures is shown under the following head in the Balance Sheet?
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Statement 2 - "Shares can be converted into debentures whereas debentures cannot be converted into shares"
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A company can issue debentures:
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:
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- Debenture are issued at a discount of 10% and redeemable at a premium of 10%.
