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X.Ltd. Issued 15,000, 10% Debentures of Rs 100 Each. Give Journal Entries and the Balance Sheet in Each of the Following Cases: - Accountancy

Numerical

X.Ltd. issued 15,000, 10% debentures of Rs 100 each. Give journal entries and the Balance Sheet in each of the following cases:

(i) The debentures are issued at a premium of 10%;

(ii) The debentures are issued at a discount of 5%;

(iii) The debentures are issued as a collateral security to bank against a loan of Rs 12,00,000; and

(iv) The debentures are issued to a supplier of machinery costing Rs 13,50,000.

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Solution

(i)

Books of X. Ltd.

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount Rs

 

Bank A/c

Dr.

 

16,50,000

 

 

 

To 10% Debentures A/c

 

 

15,00,000

 

 

To Securities Premium A/c

 

 

1,50,000

 

(Issued 15,000, 10% debentures of Rs 100 each at

10% premium)

X Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

 a. Reserves and Surplus

1

1,50,000

2. Non-Current Liabilities

 

 

a. Long-Term Borrowings

2

15,00,000

3. Current Liabilities

 

 

Total

 

16,50,000

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

3

16,50,000

Total

 

16,50,000

NOTES TO ACCOUNTS

Note No.

Particulars

Amount

(Rs)

1

Reserves and Surplus

 

 

Securities Premium

1,50,000

2

Long-Term Borrowings

 

 

10% Debentures (Secured)

15,00,000

3

Cash and Cash Equivalents

 

 

Cash at Bank

16,50,0

(ii)

Bank A/c

Dr.

14,25,000

 

Discount on Issue of Debentures A/c

Dr.

75,000

 

 

To 10% Debentures

 

15,00,000

(Issued 15,000 10% Debenture of Rs 100 each at

5% discount)

 

 

X Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholder’s Funds

 

 

2. Non-Current Liabilities

 

 

a. Long-Term Borrowings

1

15,00,000

3. Current Liabilities

 

 

Total

 

15,00,000

II. Assets

 

 

1. Non-Current Assets

 

 

a. Other Non-Current Assets

2

75,000

2. Current Assets

 

 

a. Cash and Cash Equivalents

3

14,25,000

Total

 

15,00,000

NOTES TO ACCOUNTS

Note No.

Particulars

Amount

(Rs)

1

Long-Term Borrowings

 

 

10% Debentures (Secured)

15,00,000

2

Other Non-Current Assets

 

 

Discount on Issue of Debentures

75,000

3

Cash and Cash Equivalents

 

 

Cash at Bank

14,25,000

(iii) No entry will be passed for issuing debentures as a collateral security 

X Ltd.

Balance Sheet

Particulars

Note

No.

Amount

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

2. Non-Current Liabilities

 

 

a. Long-Term Borrowings

1

12,00,000

3. Current Liabilities

 

 

Total

 

12,00,000

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

12,00,000

Total

 

12,00,000

NOTES TO ACCOUNTS

Note No.

Particulars

Amount

(Rs)

1

Long-Term Borrowings

 

 

Bank Loan (Secured against issue Debentures of Rs 12,00,000)

 

12,00,000

2

Cash and Cash Equivalents

 

 

Cash at Bank

12,00,000

Alternative Method

 

Debenture Suspense A/c

Dr.

 

15,00,000

 

 

 

To 10% Debentures A/c

 

 

15,00,000

 

(Issued 15,000 10% Debentures of Rs 100 each as collateral security to bank against a loan of Rs 12,00,000)

 

 

 

X Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Fund

 

 

2. Non-Current Liabilities

 

 

a. Long-Term Borrowings

1

12,00,000

3. Current Liabilities

 

 

Total

 

12,00,000

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

12,00,000

Total

 

12,00,000

NOTES TO ACCOUNTS

Note No.

Particulars

Amount

(Rs)

1

Long Term Borrowings

 

 

Secured:

 

 

Bank Loan

12,00,000

 

10 % Debentures (Secured against issue of Debentures of Rs 12,00,000)

15,00,000

 

 

 

Less: Debenture Suspense Account

15,00,000

-

 

 

12,00,000

2

Cash and Cash Equivalents

 

 

Cash at Bank

12,00,000

(iv)

Machinery A/c

Dr.

 

13,50,000

 

 

 

 

To Vendor A/c

 

 

13,50,000

 

(Machinery purchased from vendor)

 

 

 

 

Vendor A/c

Dr.

 

13,50,000

 

 

Discount on Issue of Debentures A/c

Dr.

 

1,50,000

 

 

 

To 10% Debenture A/c

 

 

15,00,000

 

(15,000 10% Debentures @ Rs 100 each issued at

10% discount to the vendor in consideration of

Machinery of Rs 13,50,000)

 

 

 

X Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

2. Non-Current Liabilities

 

 

a. Long Term Borrowings

1

15,00,000

3. Current Liabilities

 

 

Total

 

15,00,000

II. Assets

 

 

1. Non-Current Assets

 

 

a. Fixed Assets

 

 

i. Tangible Assets

2

13,50,000

b. Other Non-Current Assets

3

1,50,000

2. Current Assets

 

 

Total

 

15,00,000

NOTES TO ACCOUNTS

Note No.

Particulars

Amount

(Rs)

1

Long Term Borrowings

 

 

10% Debentures (Secured)

15,00,000

2

Tangible Assets

 

 

Plant and Machinery

13,50,000

3

Other Non-Current Assets

 

 

Discount on Issue of Debentures

1,50,000

Concept: Interest on Debentures
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APPEARS IN

NCERT Class 12 Accountancy - Company Accounts and Analysis of Financial Statements
Chapter 2 Issue and Redemption of Debentures
Numerical Questions | Q 12 | Page 137
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