Volume-2 | Chapter-2 | Question 6 to 10 | Issue of Debentures | Ts grewal solution 2020-21 | Class-12th

Page No 9.52:

Question 6:

Nipa Limited issued ` 10,00,000 Debentures of ` 100 each at a premium of 10% , payable 25% on application (including premium) and the balance on allotment . The debentures were applied for and the amount was dully received.
You are required to give Journal entries and prepare Cash Book.

Answer:

Face Value of Debenture = ` 100

Premium (` 100 × 10%) = ` 10

∴ Issue Price = ` 110

Amount Payable as:

On Application (25%)	` 25 including premium of ` 10 (i.e. ` 10 + 15)
On Allotment (85%)	` 85 per debenture

 

Journal
Date	Particulars		L.F.	Debit Amount `	Credit Amount `
	Debenture Application A/c	Dr.		2,50,000
	To Debentures A/c				1,50,000
	To Securities Premium A/c				1,00,000
	(Debenture application money received for 10,000 debentures at ` 25 including premium of `10 each transferred to debenture account)
	Debenture Allotment A/c	Dr.		8,50,000
	To Debentures A/c				8,50,000
	(Debentures allotment due on 10,000 Debentures at ` 85 each)

 

Cash Book
Dr.							Cr.
Date	Particulars	L.F.	Bank `	Date	Particulars	L.F.	Bank `
	Debenture Application		2,50,000
	Debenture Allotment		8,50,000
					Balance c/d		11,00,000
			11,00,000				11,00,000

Page No 9.52:

Question 7:

Alok Ltd. issued 7,000, 10% Debentures of ` 500 each at a premium of ` 50 per debenture redeemable at a premium of 10% after 5 years. According to the terms of issue, ` 200 was payable on application and balance on allotment.
Record necessary Journal entries at the time of issue of 10% Debentures.

Answer:

Journal
Date	Particulars		L.F.	Debit Amount (`)	Credit Amount (`)
	Bank A/c (7,000×200)	Dr.		14,00,000
	To Debenture Application A/c				14,00,000
	(Received application money on 7,000 debentures)
	Debenture Application A/c	Dr.		14,00,000
	To 10% Debentures A/c				14,00,000
	(Transfer of application money to Debentures A/c)
	Debenture Allotment A/c (7,000×350)	Dr.		24,50,000
	Loss on issue of Debentures A/c (7,000×50)	Dr.		3,50,000
	To 10% Debentures A/c (7,000×300)				21,00,000
	To Securities Premium Reserve A/c (7,000×50)				3,50,000
	To Premium on Redemption of Debentures A/c(7,000×50)				3,50,000
	(Allotment due on 7,000 Debentures at a premium of ` 50 per debentures and redeemable at premium of 10%)
	Bank A/c	Dr.		24,50,000
	To Debenture Allotment A/c				24,50,000
	(Allotment money received)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page No 9.52:

Question 8:

Vijay Laxmi Ltd. invited applications for 10,000; 12% Debentures of ` 100 each at a premium of ` 70 per debenture .The full amount was payable on application.
Applications were received for 13,500 debentures. Applications for 3,500 debentures were rejected  and application money was refunded . Debentures were allotted to the remaining applications .

Answer:

In the Books of Vijay Laxmi Ltd. Journal
Date	Particulars		L.F.	Debit Amount `	Credit Amount `
	Bank A/c	Dr.		22,95,000
	To Debenture Application and Allotment A/c				22,95,000
	(Application money received on 13,500 12% debenture)
	Debenture Application and Allotment A/c	Dr.		22,95,000
	To 12% Debentures A/c				10,00,000
	To Securities Premium Reserve A/c				7,00,000
	To Bank A/c				5,95,000
	(10,000; 12% Debentures issued at a premium of ` 70 and excess money refunded)

 Page No 9.52:

Question 9:

Iron Products Ltd. issued 5,000; 9% Debentures of ` 100 each at a premium of ` 40 payable as follows;
(i) ` 40 , including premium of ` 10 on applications;
(ii) ` 45, including premium of ` 15 on allotment ; and
(iii) Balance as first and final call.
The issue was subscribed and allotment made. Calls were made and due amount  was received .
Pass Journal entries .

Answer:

Journal
Date	Particulars		L.F.	Debit Amount (`)	Credit Amount (`)
	Bank A/c (5,000×40)	Dr.		2,00,000
	To Debenture Application A/c				2,00,000
	(Application money received)
	Debenture Application A/c	Dr.		2,00,000
	To 9% Debentures A/c (5,000×30)				1,50,000
	To Security Premium Reserve A/c (5,000×10)				50,000
	(Application money adjusted)
	Debenture Allotment A/c (5,000×45)	Dr.		2,25,000
	To 9% Debentures A/c  (5,000×30)				1,50,000
	To Security Premium Reserve A/c (5,000×15)				75,000
	(Allotment money due)
	Bank A/c (5,000×45)	Dr.		2,25,000
	To Debenture Allotment A/c				2,25,000
	(Allotment money received)
	Debenture First and Final call A/c (5,000×55)	Dr.		2,75,000
	To 9% Debentures A/c (5,000×40)				2,00,000
	To Security Premium Reserve A/c (5,000×15)				75,000
	(First call money due)
	Bank A/c	Dr.		2,75,000
	To Debenture Final and Final call A/c				2,75,000
	(First Call money Received)

Page No 9.52:

Question 10:

Anupama Ltd . issued 12,000; 8% Debentures of  `  100 each at a discount of 5% payable as 25% on application;20% on allotment and balance after three months.
Pass Journal entries.

Answer:

Face Value of Debenture = ` 100

Discount (` 100 × 5%) = ` 5

∴ Issue Price = ` 95

Amount Payable as:

On Application (25%)	` 25 per debenture
On Allotment (20%)	` 20 (25 – 5) per debenture
On First and Final Call (50%)	` 50 per debenture

 

Journal
Date	Particulars		L.F.	Debit Amount `	Credit Amount `
	Bank A/c	Dr.		3,00,000
	To 8% Debenture Application A/c				3,00,000
	(Application money received for 12,000 8% Debentures at ` 25 each)
	8% Debenture Application A/c	Dr.		3,00,000
	To 8% Debentures A/c				3,00,000
	(Debenture application money transferred to 8% Debentures account)
	8% Debentures Allotment A/c	Dr.		2,40,000
	Discount on Issue of Debentures A/c	Dr.		60,000
	To 8% Debentures A/c				3,00,000
	(Allotment money due on 12,000 8% Debentures at ` 20 each at discount of ` 5)
	Bank A/c	Dr.		2,40,000
	To 8% Debenture Allotment A/c				2,40,000
	(Allotment money received)
	8% Debenture First and Final Call A/c	Dr.		6,00,000
	To 8% Debentures A/c				6,00,000
	(First and final call money due on 12,000 8% Debentures at ` 50 each)
	Bank A/c	Dr.		6,00,000
	To 8% Debentures First and Final Call A/c				6,00,000
	(First and Final call money received)

 

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