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Pass Necessary Journal Entries in the Following Cases Kay Ltd. Converted 3,000, 12% Debentures of Rs 100 Each Issued at a Premium of 10% into Equity Shares of Rs 100 Each Issued at a Premium of 25%. - CBSE (Arts) Class 12 - Accountancy

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Question

Pass necessary journal entries in the following cases

Kay Ltd. converted 3,000, 12% debentures of Rs 100 each issued at a premium of 10% into equity shares of Rs 100 each issued at a premium of 25%.

Solution

Books of Kay Ltd.
Journal Entry
Date Particulars L.F.

Dr.

Rs

Cr.

Rs

 

12% Debenture A/c      Dr.

     To Debenture holder A/c

(Being 3,000 12% debenture of  Rs 100 each issue at a discount of 6% due for redemption)

 

3,00,000

 

 

 

3,00,000

 

 

Debenture Holder A/c    Dr.

    To Equity share capital A/c

    To Securities premium A/c

(Being payment made to debenture holder by issuing 2,400 equity share of Rs 100 each premium of Rs 25%)

 

3,00,000

 

 

 

 

2,40,000

60,000

 

 

Working Note:

Number of shares to be issued  = `" Amount Payable to Debentureholder"/"Price of a Share"`

Number of share to be issued = `"3,00,000"/"125(100 + 25)"` = 2,400 share

  Is there an error in this question or solution?

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Solution Pass Necessary Journal Entries in the Following Cases Kay Ltd. Converted 3,000, 12% Debentures of Rs 100 Each Issued at a Premium of 10% into Equity Shares of Rs 100 Each Issued at a Premium of 25%. Concept: Types of Shares - Preference Shares Equity Shares.
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