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Question
Raj Ltd . issued 5,000; 8% Debentures of ₹ 100 each at a premium of 5% payable as follows:
₹ 10 on application ; ₹ 20 along with premium on allotment and balance on first and final call.
Pass necessary Journal entries.
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Solution
Books of Raj Ltd.
Journal
|
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
|
Bank A/c |
Dr. |
|
50,000 |
|
|
|
To 8% Debenture Application A/c |
|
|
50,000 |
|
|
|
(Debenture application money received for 5,000 debentures at Rs 10 each) |
|
|
|
|
|
|
|
|
|
|
|
|
|
8% Debenture Application A/c |
Dr. |
|
50,000 |
|
|
|
To 8% Debentures A/c |
|
|
50,000 |
|
|
|
(Debenture application money transferred to 8% Debentures A/c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
8% Debenture Allotment A/c |
Dr. |
|
1,00,000 |
|
|
|
To 8% Debentures A/c |
|
|
75,000 |
|
|
|
To Securities Premium A/c |
|
|
25,000 |
|
|
|
(Debenture allotment due on 5,000 8% Debentures at Rs 20 including premium of Rs 5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
1,00,000 |
|
|
|
To 8% Debentures Allotment A/c |
|
|
1,00,000 |
|
|
|
(Debenture allotment money received) |
|
|
|
|
|
|
|
|
|
|
|
|
|
8% Debentures First and Final Call A/c |
Dr. |
|
3,75,000 |
|
|
|
To 8% Debenture A/c |
|
|
3,75,000 |
|
|
|
(Debenture first and final call due on 5,000 Debentures at Rs 75 each) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
3,75,000 |
|
|
|
To 8% Debenture First and Final Call A/c |
|
|
3,75,000 |
|
|
|
(Debenture first and final call received) |
|
|
|
|
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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?
Narain Laxmi Ltd. invited applications for issuing 7,500; 12% Debentures of ₹ 100 each at a premium of ₹ 35 per debenture . The full amount was payable on application. Applications were received for 10,000 Debentures. Allotment was made to all the applications on pro rata.
Pass necessary Journal entries for the above transactions in the books of Narain Laxmi Ltd.
Vijay Laxmi Ltd. invited applications for 10,000; 12% Debentures of ₹ 100 each at a premium of ₹ 70 per debenture .The full amount was payable on application.
Applications were received for 13,500 debentures. Applications for 3,500 debentures were rejected and application money was refunded . Debentures were allotted to the remaining applications .
Iron Products Ltd. issued 5,000; 9% Debentures of ₹ 100 each at a premium of ₹ 40 payable as follows;
(i) ₹ 40 , including premium of ₹ 10 on applications;
(ii) ₹ 45, including premium of ₹ 15 on allotment ; and
(iii) Balance as first and final call.
The issue was subscribed and allotment made. Calls were made and due amount was received .
Pass Journal entries .
Newton Ltd. purchased a Machinery from B for ₹ 5,76,000 to be paid by the issue of 9% Debentures of ₹ 100 each at 4% discount. Journalise the trasactions.
Grown Ltd. issued 500, 10% Debentures of ₹ 1,000 each credited as fully paid-up to the promoters for their services to incorporate the company. It also issued 100, 10% Debentures of ₹ 1,000 each credited as fully paid-up to the underwriters towards their commission. Pass the Journal entries.
Pass necessary Journal entries for the issue of debentures in the following cases:
- ₹ 40,000; 12% Debentures of ₹ 100 each issued at a premium of 5% redeemable at par.
- ₹ 70,000; 12% Debentures of ₹ 100 each issued at a premium of 5% redeemable at ₹ 110.
On 1st April, 2015. Mathew Ltd. issued 10,000, 9% Debentures of ₹ 100 each at a discount of 5%, redeemable at a premium of 5%. These debentures were redeemable as follows:
| On 31st March, 2016 | 2,000 Debentures; |
| On 31st March, 2017 | 5,000 Debentures; |
| On 31st March, 2018 | 3,000 Debentures. |
Prepare the Loss on Issue of Debentures Account, Debentures Account and Premium on Redemption of Debentures Account for three years.
When debentures are issued at par and are redeemable at a premium, the loss on such an issue is debited to ______.
Premium on redemption is shown under which head until debentures are redeemed?
Pick the odd one out:
Debentures are considered as ______ equity.
Debenture premium cannot be used to ______.
Which of the following statement is true?
Which of the following is false with respect to debentures ?
Debenture holders are the ______.
Assertion (A): Sarita Pvt. Ltd. issued 15% 10,000 debentures at par @ ₹ 100 per debenture. The company suffered a loss but still the directors of the company paid interest on debentures.
Reason (R): Interest on debenture is a charge against profits and therefore, its payment is not subject to the earning of profit.
