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Question
XYZ Ltd. Issued 6,000, 12% Debentures of ? 50 each on April 1, 2014. Interest on these debenture is payable annually 3151 March each year. The debentures are redeemable in four equal installments at end of third, fourth, fifth and sixth year. You are required to pan journal entries at the time of issue and redemption of debentures in the books of the company under following cases:
- Debentures are issued at par and redeemable at par.
- Debentures are issued at a premium of 10% and redeemable at par.
- Debentures are issued at a discount of 10% and redeemable at par.
- Debenture are issued at par but redeemable at a premium of 10%.
- Debentures are issued at a premium of 10% and redeemable at premium of 10%.
- Debenture are issued at a discount of 10% and redeemable at a premium of 10%.
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Solution
(i) Debentures are issued at par and redeemable at par.
| In the books of XYZ Ltd. Journal Entries |
||||
| Date | Particulars | L.F. | Dr. (Rs.) | Cr. (Rs.) |
| 1. | Bank A/c ...Dr. | 3,00,000 | ||
| To Debenture application and allotment A/c | 3,00,000 | |||
| (Being debenture amount received) | ||||
| 2. | Debenture application and allotment A/c ...Dr. | 3,00,000 | ||
| To 12% Debenture A/c | 3,00,000 | |||
| (Being amount transfer to debenture) | ||||
| 3. | 12% Debenture A/c ...Dr. | 75,000 | ||
| To Debenture holder A/c | 75,000 | |||
| (Being amount transfer to debenture holder) | ||||
| 4. | Debenture holder A/c ...Dr. | 75,000 | ||
| To Bank A/c | 75,000 | |||
| (Being amount paid to debenture holder) | ||||
(ii) Debentures are issued at a premium of 10% and redeemable at par.
| In the books of XYZ Ltd. Journal Entries |
||||
| Date | Particulars | L.F. | Dr. (Rs.) | Cr. (Rs.) |
| 1. | Bank A/c ...Dr. | 3,30,000 | ||
| To Debenture application and allotment A/c | 3,30,000 | |||
| (Being debenture amount received) | ||||
| 2. | Debenture application and allotment A/c ...Dr. | 3,30,000 | ||
| To 12% Debenture A/c | 3,00,000 | |||
| To Securities Premium A/c | 30,000 | |||
| (Being amount transfer to debenture) | ||||
| 3. | 12% Debenture A/c ...Dr. | 75,000 | ||
| To Debenture holder A/c | 75,000 | |||
| (Being amount transfer to debenture holder) | ||||
| 4. | Debenture holder A/c ...Dr. | 75,000 | ||
| To Bank A/c | 75,000 | |||
| (Being amount paid to debenture holder) | ||||
(iii) Debentures are issued at a discount of 10% and redeemable at par.
| In the books of XYZ Ltd. Journal Entries |
||||
| Date | Particulars | L.F. | Dr. (Rs.) | Cr. (Rs.) |
| 1. | Bank A/c ...Dr. | 2,70,000 | ||
| To Debenture application and allotment A/c | 2,70,000 | |||
| (Being debenture amount received) | ||||
| 2. | Debenture application and allotment A/c ...Dr. | 2,70,000 | ||
| Loss on issue of Debenture A/c ...Dr. | 60,000 | |||
| To 12% Debenture A/c | 3,00,000 | |||
| To Premium on Redemption A/c | 30,000 | |||
| (Being amount transfer to debenture) | ||||
| 3. | 12% Debenture A/c ...Dr. | 75,000 | ||
| Premium on Redemption A/c ...Dr. | 7,500 | |||
| To Debenture holder A/c | 82,500 | |||
| (Being amount transfer to debenture holder) | ||||
| 4. | Debenture holder A/c ...Dr. | 82,500 | ||
| To Bank A/c | 82,500 | |||
| (Being amount paid to debenture holder) | ||||
(iv) Debenture are issued at par but redeemable at a premium of 10%.
| In the books of XYZ Ltd. Journal Entries |
||||
| Date | Particulars | L.F. | Dr. (Rs.) | Cr. (Rs.) |
| 1. | Bank A/c ...Dr. | 3,00,000 | ||
| To Debenture application and allotment A/c | 3,00,000 | |||
| (Being debenture amount received) | ||||
| 2. | Debenture application and allotment A/c ...Dr. | 3,00,000 | ||
| Loss on issue of Debenture A/c ...Dr. | 30,000 | |||
| To 12% Debenture A/c | 3,00,000 | |||
| To Premium on Redemption A/c | 30,000 | |||
| (Being amount transfer to debenture) | ||||
| 3. | 12% Debenture A/c ...Dr. | 75,000 | ||
| Premium on Redemption A/c ...Dr. | 7,500 | |||
| To Debenture holder A/c | 82,500 | |||
| (Being amount transfer to debenture holder) | ||||
| 4. | Debenture holder A/c ...Dr. | 82,500 | ||
| To Bank A/c | 82,500 | |||
| (Being amount paid to debenture holder) | ||||
(v) Debentures are issued at a premium of 10% and redeemable at premium of 10%.
| In the books of XYZ Ltd. Journal Entries |
||||
| Date | Particulars | L.F. | Dr. (Rs.) | Cr. (Rs.) |
| 1. | Bank A/c ...Dr. | 3,30,000 | ||
| To Debenture application and allotment A/c | 3,30,000 | |||
| (Being debenture amount received) | ||||
| 2. | Debenture application and allotment A/c ...Dr. | 3,30,000 | ||
| Loss on issue of Debenture A/c ...Dr. | 30,000 | |||
| To 12% Debenture A/c | 3,00,000 | |||
| To Securities Premium A/c | 30,000 | |||
| To Premium on Redemption A/c | 30,000 | |||
| (Being amount transfer to debenture) | ||||
| 3. | 12% Debenture A/c ...Dr. | 75,000 | ||
| Premium on Redemption A/c ...Dr. | 7,500 | |||
| To Debenture holder A/c | 82,500 | |||
| (Being amount transfer to debenture holder) | ||||
| 4. | Debenture holder A/c ...Dr. | 82,500 | ||
| To Bank A/c | 82,500 | |||
| (Being amount paid to debenture holder) | ||||
(vi) Debenture are issued at a discount of 10% and redeemable at a premium of 10%.
| In the books of XYZ Ltd. Journal Entries |
||||
| Date | Particulars | L.F. | Dr. (Rs.) | Cr. (Rs.) |
| 1. | Bank A/c ...Dr. | 2,70,000 | ||
| To Debenture application and allotment A/c | 2,70,000 | |||
| (Being debenture amount received) | ||||
| 2. | Debenture application and allotment A/c ...Dr. | 2,70,000 | ||
| Discount on issue of Debenture A/c ...Dr. | 30,000 | |||
| To 12% Debenture A/c | 3,00,000 | |||
| (Being amount transfer to debenture) | ||||
| 3. | 12% Debenture A/c ...Dr. | 75,000 | ||
| To Debenture holder A/c | 75,000 | |||
| (Being amount transfer to debenture holder) | ||||
| 4. | Debenture holder A/c ...Dr. | 75,000 | ||
| To Bank A/c | 75,000 | |||
| (Being amount paid to debenture holder) | ||||
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