Volume-2 | Chapter-2 | Question 26 to 30 | Issue of Debentures | Ts grewal solution 2020-21 | Class-12th

Page No 9.55:

Question 26:

Best Barcode Ltd. took a loan of  ` 5,00,000 from a bank giving  ` 6,00,000; 9% Debentures as collateral security. Pass journal entries regarding issue of debentures , if any, and show this loan in the Balance Sheet of the company.



Answer:

Best Barcode Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

2. Non-Current Liabilities

 

 

a. Long-Term Borrowings

1

5,00,000

3. Current Liabilities

 

 

Total

 

5,00,000

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

5,00,000

Total

 

5,00,000

 

NOTES TO ACCOUNTS

Note No.

Particulars

Amount

(Rs)

 

 

 

1

Long-Term Borrowings

 

 

Loan (Secured by issue of  9% Debentures of Rs 6,00,000 as Collateral Security)

 

5,00,000

 

 

 

2

Cash and Cash Equivalents

 

 

Cash at Bank

5,00,000

 

 

 

 

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

Bank A/c

Dr.

 

5,00,000

 

 

To Loan A/c

 

 

5,00,000

 

(Loan taken against issuing 9% Debentures as collateral Security)

 

 

 

 

 

 

 

 

 

Alternative Method:  

 

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

Bank A/c

Dr.

 

5,00,000

 

 

To Loan A/c

 

 

5,00,000

 

(Loan taken against issuing 9% debentures as collateral Security)

 

 

 

 

 

 

 

 

 

Debenture Suspense A/c

Dr.

 

6,00,000

 

 

To 9% Debentures A/c

 

 

6,00,000

 

(Issued 9% Debentures of Rs 6,00,000 as collateral security)

 

 

 

 

 

 

 

 

 

Posting in the Company's Balance Sheet

Best Barcode Ltd.

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

2. Non-Current Liabilities

 

 

a. Long-Term Borrowings

1

5,00,000

3. Current Liabilities

 

 

Total

 

5,00,000

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

5,00,000

Total

 

5,00,000

 

NOTES TO ACCOUNTS

Note No.

Particulars

Amount

(Rs)

 

 

 

1

Long-Term Borrowings

 

 

Secured:

 

 

Loan (Secured by issue of  9% Debentures of

Rs 6,00,000 as Collateral Security)

 

5,00,000

 

9% Debentures (Issued as Collateral Security to Bank against loan)

 

6,00,000

 

 

 

Less: Debenture Suspense Account

6,00,000

-

 

 

5,00,000

 

 

 

2

Cash and Cash Equivalents

 

 

Cash at Bank

5,00,000

 

 

 


Page No 9.55:

Question 27:

A company took a loan of  ` 4,00,000 from Bandhan Bank Ltd. and issued  8% Debentures of  ` 4,00,000 as a collateral security.



Answer:

When Debentures Issued as Collateral Security are shown separately

 

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

Bank A/c

Dr.

 

4,00,000

 

 

To Loan from Bandhan Bank Ltd.

 

 

4,00,000

 

(Loan taken against issuing 8% Debentures as collateral security)

 

 

 

 

 

 

 

 

 

Debenture Suspense A/c

Dr.

 

4,00,000

 

 

To 8% Debenture A/c

 

 

4,00,000

 

(Debentures issued as collateral security)

 

 

 

 

 

 

 

 

 

Posting in the Company's Balance Sheet (When Debentures Issued as Collateral Security are shown separately)

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I Equity and Liabilities

 

 

1.Shareholders’ Funds

 

 

2.Non-Current Liabilities

 

 

a. Long-Term Borrowings

1

4,00,000

3.Current Liabilities

 

 

Total

 

4,00,000

 

 

 

II Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

4,00,000

Total

 

4,00,000

 

NOTES TO ACCOUNTS

 

Note No.

Particulars

Amount

(Rs)

 

 

 

1

Long-Term Borrowings

 

 

Secured:

 

 

Loan from Bandhan Bank (Secured by issue of  Debentures of Rs 4,00,000)

4,00,000

 

8% Debentures (Issued as Collateral Security to Bank against Loan)

 

4,00,000

 

 

 

Less: Debenture Suspense Account

4,00,000

-

 

 

4,00,000

 

 

 

2

Cash and Cash Equivalents

 

 

Cash at Bank

4,00,000

 

 

 

 

Alternative Method: When debentures Issued as Collateral Security are not shown separately

 

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

Bank A/c

Dr.

 

4,00,000

 

 

To Loan From Bandhan Bank Ltd.

 

 

4,00,000

 

(Loan taken from Bandhan Bank secured by issuing Debentures as collateral security)

 

 

 

 

 

 

 

 

 

(When Debentures Issued as Collateral Security are not shown separately)

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

2. Non-Current Liabilities

 

 

a. Long-Term Borrowings

1

4,00,000

3. Current Liabilities

 

 

Total

 

4,00,000

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

4,00,000

Total

 

4,00,000

 

NOTES TO ACCOUNTS

Note No.

Particulars

Amount

(Rs)

 

 

 

1

Long-Term Borrowings

 

 

Secured:

 

 

Loan from Bandhan Bank (Secured by issue of  8% Debentures of Rs 4,00,000 as Collateral Security)

 

4,00,000

 

 

 

2

Cash and Cash Equivalents

 

 

Cash at Bank

4,00,000

 

 

 


Page No 9.55:

Question 28:

X Ltd. took a loan of  ` 3,00,000 from IDBI Bank . The company issued 4,000; 9% Debentures of  ` 100 each as a collateral security for the same . Show how these items will be presented in the Balance Sheet of the company.



Answer:

When Debentures Issued as Collateral Security is shown separately

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

3,00,000

3. Current Liabilities

 

 

Total

 

3,00,000

 

 

 

II. Assets

 

 

1.Non-Current Assets

 

 

2.Current Assets

 

 

a. Cash and Cash Equivalents

2

3,00,000

Total

 

3,00,000

 

NOTES TO ACCOUNTS

Note No.

Particulars

Amount

(Rs)

 

 

 

1

Long-Term Borrowings

 

 

Secured:

 

 

Loan  From IDBI(Secured by issue of  Debentures of Rs 4,00,000)

3,00,000

 

9 % Debentures (Issued as Collateral Security against loan)

 

4,00,000

 

 

 

Less: Debenture Suspense Account

4,00,000

-

 

 

3,00,000

 

 

 

2

Cash and Cash Equivalents

 

 

Cash at Bank

3,00,000

 

 

 

 

Alternative Method: When Debentures Issued as Collateral Security are not shown separately

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

3,00,000

3.Current Liabilities

 

 

Total

 

3,00,000

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

3,00,000

Total

 

3,00,000

 

NOTES TO ACCOUNTS

Note No.

Particulars

Amount

(Rs)

 

 

 

1

Long-Term Borrowings

 

 

Secured:

 

 

Loan From IDBI (Secured by issue of  9% Debentures of Rs 4,00,000 as Collateral Security)

 

3,00,000

 

 

 

2

Cash and Cash Equivalents

 

 

Cash at Bank

3,00,000

 

 

 


Page No 9.55:

Question 29:

S. Singh Limited obtained a loan of ` 5,00,000 from State Bank of India @ 10% p.a. interest. The company issued ` 7,50,000, 10% Debentures of ` 100 each in favour of State Bank of India as Collateral Security. Pass necessary Journal entries for the above transactions:
(i) When company decided not to record the issue of 10% Debentures as Collateral Security.
(ii) When company decided to record the issue of 10% Debentures as Collateral Security.



Answer:

(i) When company decided not to record the issue of 10% debentures as Collateral Security

In the books of S. Singh Ltd.

Journal

Date

Particulars

 

L.F.

Debit
Amount
(`)

Credit
Amount
(`)

 

Bank A/c

Dr.

 

5,00,000

 

 

  To Bank Loan A/c

 

 

 

5,00,000

 

(Being bank loan taken from State Bank of India @10% p.a. interest)

 

 

 

 

(ii) When company decided to record the issue of 10% debentures as Collateral Security

In the books of S. Singh Ltd.

Journal

Date

Particulars

 

L.F.

Debit Amount (`)

Credit Amount (`)

 

Bank A/c

Dr.

 

5,00,000

 

 

  To Bank Loan A/c

 

 

 

5,00,000

 

(Being bank loan taken from State Bank of India @10% p.a. interest)

 

 

 

 

 

 

 

 

 

 

 

Debentures Suspense A/c

Dr.

 

7,50,000

 

 

  To 10% Debentures A/c

 

 

 

7,50,000

 

(Being 7,500, 10% Debentures issued as collateral security)

 

 

 

 


Page No 9.55:

Question 30:

Journalise the following:
(a) A debenture issued at `95, repayable at ` 100.
(b) A debenture issued at `95, repayable at ` 105.
(c) A debenture issued at `95, repayable at ` 105.
The face value of debenture is  ` 100 in each of the above cases.



Answer:

Journal

Date

Particulars

L.F.

Debit 

Amount

Rs

Credit Amount

Rs

(a)

Bank A/c

Dr.

 

95

 

 

To Debenture Application A/c

 

 

95

 

(Debenture application money received)

 

 

 

 

 

 

 

 

 

Debenture Application A/c

Dr.

 

95

 

 

Discount on Issue of Debentures A/c

 

 

5

 

 

To Debenture A/c

 

 

100

 

(Debenture of Rs 100 each issued at Rs 95 with the term repayable at par)

 

 

 

 

 

 

 

 

(b)

Bank A/c

Dr.

 

95

 

 

To Debenture Application A/c

 

 

95

 

(Debenture application money received)

 

 

 

 

 

 

 

 

 

Debenture Application A/c

Dr.

 

95

 

 

Discount on Issue of Debentures A/c

Dr.

 

5

 

 

Loss on Issue of Debentures A/c

Dr.

 

5

 

 

To Debentures A/c

 

 

100

 

To Premium on Redemption A/c

 

 

5

 

(Debenture of Rs 100 each issued of Rs 95 with the term repayable at Rs 105)

 

 

 

 

 

 

 

 

(c)

Bank A/c

Dr.

 

100

 

 

To Debenture Application A/c

 

 

100

 

(Debenture Application received)

 

 

 

 

 

 

 

 

 

Debenture Application A/c

Dr.

 

100

 

 

Loss on Issue of Debentures A/c

Dr.

 

5

 

 

To Debentures A/c

 

 

100

 

To Premium on Redemption A/c

 

 

5

 

(Debenture of Rs 100 each issued at par with the term repayable at Rs 105)

 

 

 

 

 

 

 

 

 


Click on Below link for more questions of Issue Of Debenture

From Question No. 1 to 5

From Question No. 6 to 10

From Question No. 11 to 15

From Question No. 16 to 20

From Question No. 21 to 25

From Question No. 26 to 30

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