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Question
Pioneer Ltd. issued 5,000, 9% Debentures of ₹ 100 each at par and also raised a loan of ₹ 80,000 from SBI, collaterally secured by ₹ 1,00,000, 9% Debentures. How will be the debentures shown in the Balance Sheet: of the company if the company has passed the Journal entry for issue of debentures as collateral security. Also Journalise the issue of debentures.
Journal Entry
Ledger
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Solution
| JOURNAL OF PIONEER LTD. | ||||
|---|---|---|---|---|
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
| 1. | Bank A/c ...Dr. | 5,00,000 | ||
| To Debentures Application and Allotment A/c | 5,00,000 | |||
| (Debentures application money received) | ||||
| 2. | Debentures Application and Allotment A/c ...Dr. | 5,00,000 | ||
| To 9% Debentures A/c | 5,00,000 | |||
| (Issue of 5,000, 9% Debentures of ₹ 100 each at par) | ||||
| 3. | Debenture Suspense A/c ...Dr. | 1,00,000 | ||
| To 9% Debenture A/c | 1,00,000 | |||
| (Issue of 1,000, 9% Debentures of ₹ 100 each as collateral security for a loan from bank SBI) | ||||
| AN EXTRACT OF BALANCE SHEET as at... | ||
|---|---|---|
| Particulars | Note No. | ₹ |
| I. EQUITY AND LIABILITIES | ||
| Non-current Liabilities | ||
| Long-term Borrowings | 1 | 5,80,000 |
| Note to Accounts | |
|---|---|
| Particulars | ₹ |
| 1. Long-term Borrowings | |
| 5,000, 9% Debentures of ₹ 100 each | 5,00,000 |
| Loan from Bank (SBI) (Secured by the issue of 1,000, 9% Debentures of ₹ 100 each as collateral security) | 80,000 |
| 1,000, 9% Debentures of ₹ 100 each (Issued as collateral security) | 1,00,000 |
| Less: Debentures Suspense Account | 1,00,000 |
| Net | Nil |
| Total Long-term Borrowings | 5,80,000 |
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