Advertisements
Advertisements
Question
X Ltd. redeemable 100, 6% Debentures of Rs 100 each by converting them into Equity Shares of Rs 100 each. The 6% Debentures were redeemable at 10% premium for which the Equity Shares were issued at 25% premium. Pass the necessary Journal entries for the redemption of above mentioned debentures in the books of X Ltd.
Advertisements
Solution
|
Journal of Y Ltd. |
|||||
|
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
|
6% Debenture A/c |
Dr. |
|
10,000 |
|
|
|
Premium on Redemption of Debentures A/c |
Dr. |
|
1,000 |
|
|
|
To Debentureholders’ A/c |
|
|
11,000 |
|
|
|
(Being amount due to debentures holder) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debenturesholders’ A/c |
Dr. |
|
11,000 |
|
|
|
To Equity Share Capital A/c |
|
|
8,800 |
|
|
|
To Securities Premium A/c |
|
|
2,200 |
|
|
|
(Issue of 88 shares of Rs 100 each at premium of 25%) |
|
|
|
|
Notes
`"Number of equity Shares to be issue" ="Amount Payble"/"Issue Price"=(11,000)/(100+25)=11,000/125`
=`88 "shares"`
APPEARS IN
RELATED QUESTIONS
On 1.4.2015, KVK Ltd. issued 15,000, 9% debentures of Rs 100 each at a discount of 7%, redeemable t a premium of 10% after 10 years. The company closes its books on 31st March every year. Interest on 9%debentures is payable on 30th September and 31st March every year. The rate of tax deducted at source is 10%.
Pass necessary journal entries for the issue of 9% debentures and debenture interest for the year ended 31.3.2016.
On 1.4.2015, MKM Ltd. issued 12,000, 11% debentures of `100 each at a discount of 8%, redeemable at a premium of 10% after three years. The company closes its books on 31st March every year. Interest on 11% debentures is payable on 30th September and 31st March every year. The rate of tax deducted at source is 10%.
Pass necessary journal entries for the issue of 11% debentures and debenture interest for the year ended 31.3.2016.
'Ananya Ltd' had an authorized capital of Rs 10,00,00,000 divided into 10,00,000 equity shares of Rs 100 each. The company had already issued 2,00,000 shares. The dividend paid per share for the year ended 31.3.2007 was Rs 30. The management decided to export its products to African countries. To meet the requirements of additional funds, the finance manager put up the following three alternate proposals before the Board of Directors:
(1) Issue 47,500 equity shares at a premium of Rs 100 per share.
(2) Obtain a long-term loan from the bank which was available at 12% per annum.
(3) Issue 9% debentures at a discount of 5%.
After evaluating these alternatives the company decided to issue 1,00,000, 9% debentures on 1.4.2008. The face value of each debenture was Rs 100. These debentures were redeemable in four installments starting from the end of the third year, which was as follows:
| Year | Rs |
| III | 10,00,000 |
| IV | 20,00,000 |
| V | 30,00,000 |
| VI | 40,00,000 |
Prepare 9% debenture account from 1.4.2008 till all the debentures were redeemed.
The issue of debenture more than the face value is termed as an issue of debenture at par.
BBG Ltd. invited applications for issuing 2,00,000 equity shares of Rs 10 each at a premium of Rs 10 per share. The amount was payable as follows:
On Application − Rs 4 per share (including Rs 2 premium)
On Allotment − Rs 5 per share (including Rs 2 premium)
On First call − Rs 5 per share (including Rs 3 premium)
On Second and final call − Balance amount
The issue was fully subscribed. Raghu, a shareholder holding 1000 shares, failed to pay the allotment money and Rahim, another shareholder holding 1500 shares, paid his entire share money along with allotment. Raghu's shares were forfeited immediately after allotment. Afterwards, the first call was made Deenanath, a shareholder holding 500 shares, failed to pay the first call money and Dayal, a shareholder holding 600 shares, paid his second call money along with the first call. Deenanath's shares were forfeited immediately after the first call. Later on the second call was made which was duly received.
Pass necessary journal entries for the above transactions in the books of BBG Ltd.
Joy Ltd. invited applications for issuing 20,000 equity shares of Rs 10 each at par. The amount was payable as follows:
On Application − Rs 3 per share
On Allotment − Rs 4 per share
On First and find call − Balance amount
The issue was oversubscribed by three times. Applications for 20% shares were rejected and the money was refunded. Allotment was made to the remaining applicants as follows:
| Category | No. of Shares Applied | No. of Shares Allotted |
| I | 30,000 | 15,000 |
| II | 18,000 | 5,000 |
Excess money received with applications was adjusted towards sums due on allotment. Money in excess to sums due on allotment was adjusted towards sums due on first and final call and any money in excess to sums due on first and final call was refunded. Kavi, a shareholder who had applied for 600 shares, failed to pay the remaining allotment money and his shares were immediately forfeited. Kavi belonged to Category I.
Afterwards the first and final call was made. Gupta, who had applied for 400 shares, failed to pay the first and final call. Gupta also belonged to Category I.
Shares of Gupta were also forfeited after the first and final call. The forfeited shares were reissued at Rs 12 per share fully paid up.
Pass necessary journal entries for the above transactions in the books of Joy Ltd.
From the following Statement of Profit and Loss of Navratan Ltd. for the year ended 31st March, 2013, prepare a Comparative Statement of Profit and Loss:
| Particulars | Note No. | 2012 – 13 Rs |
2011 – 12 Rs |
| Revenue from operations | 8,05,000 | 6,14,000 | |
| Other Incomes | 43,000 | 51,000 | |
| Expenses | 5,59,000 | 4,88,000 |
Rate of income tax was 40%.
Shakti Ltd. decided to redeem its 750, 12% Debentures of Rs 100 each. The company purchased 500 Debentures at Rs 94 per Debenture from the open market. The remaining debentures were redeemed out of profits. The company had already made a provision for Debenture Redemption Reserve in its books.
Pass necessary Journal Entries in the books of the company for the above transactions.
Pass the necessary Journal entries of the issues and redemption of Debentures in the following cases:
(i) 10,000, 10% Debentures of Rs 120 each issued at 5% premium, repayable at par.
(ii) 20,000, 9% Debentures of Rs 200 each issued at 20% premium, repayable at 30% premium.
On 1st April, 2008 a company made an issue of Rs 2,00,000, 6% Debentures of Rs 100 each, repayable at a premium of 10%. The terms of issue provided for the redemption of 400 debentures every year starting from the end of 31-3-2010 either by purchase from the open market or by draw of lots at the company’s option.
On 31-3-2010, the company purchased for cancellation 300 debentures at 95% and 100 debentures at 90%.
Pass the necessary Journal entries for the issue and redemption of debentures assuming that the company had already created the
Debentures Redemption Reserve A/c by the require amount.
Nav Lakshmi Ltd. Invited application for issuing 3,000, 12% Debentures of Rs 100 each at a premium of Rs 50 per Debentures. The full amount was payable on application.
Applications were received for 4,000 debentures. Application for 1,000 debentures were rejected and application money was refunded. Debentures were allotted to the remaining applicants.
Pass necessary Journal entries for the above transaction in the books of Nav Lakshmi Ltd
Sarvottam Ltd. Decided to redeem its 1250, 12% Debentures of Rs 100 each. It purchased 850 Debentures from the open market at Rs 96 per Debenture. The remaining Debenture were redeemed out of profit. The company has already made a provision for Debenture Redemption Reserve in its books.
Pass necessary Journal entries in the books of the company for the above transaction.
Pass necessary Journal entries for the following transaction in the books of Fortune Ltd:
(i) Redeemed Rs 96,000, 12% Debenture by conversion into Equity Shares of Rs 100 each. The
Equity Shares were issued at a discount 4%.
(ii) Converted 4,800, 12% Debentures of Rs 100 each into New 13% Debentures of Rs 100 each.
The new Debentures were issued at a premium 25%.
X Ltd. obtained a loan of Rs. 4,00,000 from IDBI Bank. The company issued 5,000, 9% Debentures of Rs. 100 each as collateral security for the same. Show how these items will be presented in the Balance Sheet of the company.
Devi Ltd., on 1st April 2006 acquired assets of the value of Rs 6,00,000 and liabilities worth Rs 70,000 from P & Co., at an agreed value of Rs 5,50,000. Devi Ltd. issued 12% Debentures of Rs 100 each at a premium of 10% in full satisfaction of purchase consideration. The Debentures were redeemable 3 years later at a premium of 5%. Pass entries to record the above including redemption of debentures.
Write one word/term/phrase which can substitute the following
The debentures where a charge is created on the assets of company.
Select most appropriate alternative from those given below :
The issue of debentures more than face value is called___________.
State to whether the following statement is True/False.
The issue of debentures less than face value of debenture to termed as issue of debentures at discount.
State to whether the following statement is True/False.
The issue of debenture more than face value is termed on issue of debentures at par.
Archana Ltd. issued 2,000 10% Debentures of Rs 100 each at a premium of Rs 10 per Debenture payable as follows:
On Application : Rs. 50
On Allotment : Rs. 60 (Premium included Rs. 10)
The Debentures were fully subscribed and all money was duly received.
Pass Journal entries and show how the amounts appear in Balance Sheet.
Amar Ltd. purchased assets of the book value of Rs 99,000 from Abhi Ltd. It was agreed that purchase consideration to be paid by issuing 11% Debentures of Rs 100 each Assume debentures have been issued.
1. At par
2. At Discount of 10% and
3. At Premium of 10%
Record necessary journal entries
BGP Ltd. invited applications for issuing 15,000, 11% debentures of ₹ 100 each at a premium of ₹ 50 per debenture. The full amount was payable on application. Applications were received for 25,000 debentures. Applications for 5,000 debentures were rejected and the application money was refunded. Debentures were allotted to the remaining applicants on a pro-rata basis.
Pass the necessary journal entries for the above transactions in the books of BGP Ltd.
Suhas Ltd. issued 1,000, 7% Debentures of ₹ 100 each to be redeemed after three years at a premium of 5%. The face value of the debentures was payable as:
₹ 20 on Application
₹ 30 on Allotment (on 1st May, 2020)
₹ 30 on First call (on 1st October, 2020)
₹ 20 on Final call (on 1st January, 2021)
All the debentures were applied and allotted.
Ali, to whom 20 debentures were allotted, paid the allotment money and the two calls on 31st March, 2021. The Articles of Association of the company provided for interest on calls-in-arrear to be charged @ 10% per annum, which Ali paid on 31st March, 2021.
You are required to pass journal entries in the books of Suhas Ltd. to record:
- The adjustment and receipt of interest on calls in arrears
- The entry to close the interest on calls in arrears account
Durga Ltd. issued 80,000, 10% Debentures of ₹ 100 each at a certain rate of discount and were to be redeemed at a 20% premium. Existing balance of Securities Premium before issuing of these debentures was ₹ 25,00,000 and after writing off Loss on the Issue of Debentures, the balance in Securities Premium was ₹ 5,00,000. At what rate of discount, these debentures were issued?
Pass necessary journal entries for the issue of debentures in the following cases:
- Issued 50,000, 9% debentures of ₹ 100 each at par redeemable at par.
- Issued 10,000, 8% debentures of ₹ 100 each at 7% premium redeemable at par.
- Issued 750, 8% debentures of ₹ 100 each at 10% discount redeemable at par.
- Issued 1,000, 9% debentures of ₹ 100 each at 5% premium redeemable at 8% premium.
- Issued 500, 9% debentures of ₹ 100 each at 10% discount redeemable at 10% premium.
Pass necessary journal entries for the issue of debentures in the following cases :
- Issued ₹ 7,00,000, 9% debentures of ₹ 100 each at a premium of 20% redeemable at a premium of 10% after 6 years.
- Issued 10,000, 12% debentures of ₹ 100 each at 10% discount redeemable at a premium of 5% after 5 years.
- Issued 75,000, 12% debentures of ₹ 100 each at par, redeemable at premium of 10% after three years.
Which of the following statement is incorrect with respect to debentures?
'Vimal Ltd. purchased assets a worth ₹ 5,00,000 and took over liabilities of ₹ 1,00,000 of Kapil Ltd. for a purchase consideration of ₹ 4,50,000. Vimal Ltd. paid one third of the amount of cheque and balance was settled by issuing 11% debentures of 100 each at a premium of 20%.
Pass necessary journal entries in the books of Vimal Ltd. for the above transactions.
Chiranjeevi Limited issued 2,000, 10% debentures of ₹ 100 each. Pass the necessary Journal entries for the issue of debentures in the following cases:
- When debentures were issued at 10% premium, redeemable at 5% premium.
- When debentures were issued at 5% discount, redeemable at 10% premium.
- When debentures were issued at par, redeemable at a premium of 10%
Alexa Ltd. purchased building from Siri Ltd for ₹ 8,00,000. The consideration was paid by issue of 6% debentures of ₹ 100 each at a discount of 20%. The 6% Debentures account is credited with ______.
During the year 2021-22 SM Ltd. issued 10,000, 10% Debentures of ₹ 100 each at a discount of 10% to be redeemed after three years. The company had a balance of ₹ 60,000 in its Securities Premium Reserve.
What amount will be added under Operating Activities as Discount on Issue of Debentures written off in the Cash Flow Statement of SM Ltd. for the year 2021-22?
On 1st April, 2023, Ruth Ltd. purchased Plant and Machinery for ₹ 11,00,000 from Pablo Ltd. payable as to ₹ 1,00,000 by accepting a promissory note and the balance by an issue of 11% Debentures of ₹ 100 each at a premium of 10% to be redeemed at a premium of 2 % after six years. You are required to pass journal entries in the books of Ruth Ltd. only to record the payment made to Pablo Ltd.
