MENU
Question -

A company issues the following debentures:
(i) 10,000, 12% debentures of ₹ 100 each at par but redeemable at premium of 5% after 5 years;
(ii) 10,000, 12% debentures of ₹ 100 each at a discount of 10% but redeemable at par after 5 years;
(iii) 5,000, 12% debentures of ₹ 1,000 each at a premium of 5% but redeemable at par after 5 years;
(iv) 1,000, 12% debentures of ₹ 100 each issued to a supplier of machinery costing ₹ 95,000. The debentures are repayable after 5 years; and
(v) 300, 12% debentures of ₹ 100 each as a collateral security to a bank which has advanced a loan of ₹ 25,000 to the company for a period of 5 years.
Pass the journal entries to record the: (a) issue of debentures; and (b) repayment of debentures after the given period.



Answer -

In the books of …………..

Journal

a)Issue of Debentures

 

S. No.

Particulars

L.F.

Debit

Amount

₹

Credit

Amount

₹

(i)

Bank A/c

Dr.

10,00,000

To 12% Debenture Application A/c

10,00,000

(Debenture Application money of 10,000 12% debentures

@ 100 each received)

12% Debenture Application A/c

Dr.

10,00,000

Loss on Issue of Debenture A/c

Dr.

50,000

To 12% Debenture A/c

10,00,000

To Premium on Redemption of Debenture A/c

50,000

(Debenture Application money of 10,000 12% debentures @ ₹ 100 each transferred to 12% Debentures Account and the Debentures are issued with term of repayable at 5% premium)

(ii)

Bank A/c

Dr.

9,00,000

To Debenture Application and Allotment A/c

9,00,000

(Debenture Application money received excluding discount on issue)

12% Debenture Application & Allotment A/c

Dr.

9,00,000

Discount on Issue of Debenture A/c

Dr.

1,00,000

To Debentures A/c

10,00,000

(Debenture Allotment made due)

(iii)

Bank A/c

Dr.

52,50,000

To Debenture Application and Allotment A/c

52,50,000

(Debenture Application money received)

Debenture Application and Allotment A/c

Dr.

52,50,000

To Debenture A/c

50,00,000

To Security Premium A/c

2,50,000

(Allotment of debenture at premium)

(iv)

Machinery A/c

Dr.

95,000

To Vender A/c

95,000

(Machinery purchased from supplier)

Vender A/c

Dr.

95,000

Discount on Issue of Debenture

Dr.

5,000

To 12% Debenture A/c

1,00,000

(Debenture issue at discount to vender of machinery)

(v)

12% Debenture Suspense A/c

Dr.

30,000

To Debenture A/c

30,000

(300, 12% Debentures of ₹ 100 each issued as collateral

security to the bank against a loan of ₹ 25,000)

b)Repayment of Debentures

 

S.No.

Particulars

L.F.

Debit

Amount

₹

Credit

Amount

₹

(i)

12% Debentures A/c

Dr.

10,00,000

Premium on Redemption of Debenture A/c

Dr.

50,000

To Debenture Holders A/c

10,50,000

(Amount due on redemption of debentures)

Debenture Holders A/c

Dr.

10,50,000

To Bank A/c

10,50,000

(Payment made to Debenture Holders)

(ii)

12% Debenture A/c

Dr.

10,00,000

To Debenture Holders A/c

10,00,000

(Amount due on redemption of debentures)

Debenture Holders A/c

Dr.

10,00,000

To Bank A/c

10,00,000

(Payment made to Debenture Holders)

(iii)

12% Debenture A/c

Dr.

50,00,000

To Debenture Holders A/c

50,00,000

(Amount due on redemption of debentures)

Debenture Holders A/c

Dr.

50,00,000

To Bank A/c

50,00,000

(Payment made to Debenture Holders)

(iv)

12% Debenture A/c

Dr.

1,00,000

To Vender A/c

1,00,000

(Amount due to vender)

Vender A/c

Dr.

1,00,000

To Bank

1,00,000

(Payment made to vender)

(v)

12% Debenture A/c

Dr.

30,000

To Debenture Suspense A/c

30,000

(Debenture and debenture Suspense Account closed)

 

Comment(S)

Show all Coment

Leave a Comment

Free - Previous Years Question Papers
Any questions? Ask us!
NodeJS Interview Questions Answers
ASP.Net Interview Questions Answers
Interview Questions Answers
×