Question

X Ltd. issued 5,000, 8% Debentures of ₹ 200 each at a premium of 6%, redeemable at a premium of 5% after 5 years. According to the terms of issue, ₹ 80 was payable on application and balance on allotment.

Record necessary Journal entries for issue of Debentures.

Answer 1

In the books of X Ltd.
Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c (5,000 × 80)   ...Dr.		4,00,000	-
	To Debenture Application A/c		-	4,00,000
	(Being application money received.)
2.	Debenture Application A/c   ...Dr.		4,00,000	-
	To 8% Debenture A/c		-	4,00,000
	(Being application money transfer to Debenture A/c.)
3.	Bank A/c (5000 × 132)   ...Dr.		6,60,000	-
	To Debenture Allotment A/c		-	6,60,000
	(Being application money received.)
4.	Debenture Allotment A/c   ...Dr.		6,60,000	-
	Loss on Issue of Debentures A/c   ...Dr.		50,000	-
	To 8% Debenture A/c (5,000 × 120)		-	6,00,000
	To Securities Premium A/c (5,000 × 12)		-	60,000
	To Premium on Redemption A/c (5,000 × 10)		-	50,000
	(Being application money transfer to Debenture A/c.)
5.	Securities Premium A/c   ...Dr.		50,000	-
	To Loss on Issue of Debenture A/c		-	50,000
	(Being loss on issue of debenture written off.)