S. Singh Limited obtained a loan of ₹ 5,00,000 from State Bank of India @ 10% p.a. interest. The company issued ₹ 7,50,000, 10% Debentures of ₹ 100 each in favour of State Bank of India as Collateral Security. Pass necessary Journal entries for the above transactions:
(i) When company decided not to record the issue of 10% Debentures as Collateral Security.
(ii) When company decided to record the issue of 10% Debentures as Collateral Security.
Solution
(i) When company decided not to record the issue of 10% debentures as Collateral Security
In the books of S. Singh Ltd.
Journal
|
Date |
Particulars |
|
L.F. |
Debit |
Credit |
|
|
Bank A/c |
Dr. |
5,00,000 |
|
|
|
|
To Bank Loan A/c |
|
|
5,00,000 |
|
|
|
(Being bank loan taken from State Bank of India @10% p.a. interest) |
|
|
|
(ii) When company decided to record the issue of 10% debentures as Collateral Security
In the books of S. Singh Ltd.
Journal
|
Date |
Particulars |
|
L.F. |
Debit Amount (₹) |
Credit Amount (₹) |
|
|
Bank A/c |
Dr. |
5,00,000 |
|
|
|
|
To Bank Loan A/c |
|
|
5,00,000 |
|
|
|
(Being bank loan taken from State Bank of India @10% p.a. interest) |
|
|
|
|
|
|
|
|
|
||
|
|
Debentures Suspense A/c |
Dr. |
7,50,000 |
|
|
|
|
To 10% Debentures A/c |
|
|
7,50,000 |
|
|
|
(Being 7,500, 10% Debentures issued as collateral security) |
|
|
|
