Question

You are required to pass Journal entries to record the following issue of debentures and to write off capital loss:

Climax Ltd. issues 2,000, 9% Debentures of ₹ 100 each at a discount of 6% redeemable at par.

Answer 1

Journal Entries in the Books of Climax Ltd.
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
1.	Bank A/c   ...Dr.		1,88,000
	Discount on Issue of Debentures A/c   ...Dr.		12,000
	To 9% Debentures A/c			2,00,000
	(Being 2,000, 9% Debentures of ₹ 100 each issued at 6% discount and redeemable at par)
2.	Statement of Profit & Loss A/c (Finance Cost)   ...Dr.		12,000
	To Discount on Issue of Debentures A/c			12,000
	(Being discount on issue of debentures written off)

Working Note:

Face value of Debentures:

2,000 × ₹ 100 = ₹ 2,00,000

Discount on Issue:

₹ 2,00,000 × 6% = ₹ 12,000

Amount received:

₹ 2,00,000 − ₹ 12,000 = ₹ 1,88,000