Volume-2 | Chapter-2 | Question 36 to 40 | Issue of Debentures | Ts grewal solution 2020-21 | Class-12th

Page No 9.56:

Question 36:

Pass necessary Journal entries for the issue of Debentures in the following cases:
(a)  ` 40,000; 15% Debentures of  ` 100 each issued at a discount of 10% redeemable at par.
(b)  ` 80,000; 15% Debentures of  ` 100 each issued at a premium of 10% redeemable at a premium of 10%.

Answer:

(a)

Journal
Date	Particulars		L.F.	Debit Amount `	Credit Amount `
	Bank A/c	Dr.		36,000
	To Debenture Application A/c				36,000
	(400 debentures issued at ` 100 at discount of 10%)
	Debenture Application A/c	Dr.		36,000
	Discount on Issue of Debentures A/c	Dr.		4,000
	To 15% Debenture A/c				40,000
	(400 debentures issued at discount and redeemable at a par )

 

(b)

Journal
Date	Particulars		L.F.	Debit Amount `	Credit Amount `
	Bank A/c	Dr.		88,000
	To Debenture Application A/c				88,000
	(800 debentures issued at ` 100 at a premium of 10%)
	Debenture Application A/c	Dr.		88,000
	Loss on Issue of Debentures A/c	Dr.		8,000
	To 15% Debenture A/c				80,000
	To Premium on Redemption A/c				8,000
	To Securities Premium A/c				8,000
	(800 debentures issued at a premium of 10% and redeemable at a premium of 10%)

 Page No 9.56:

Question 37:

XYZ  Ltd. issued 5,000 , 10% Debentures of  ` 100 each on 1st April, 2015 at a discount of 10% redeemable at a premium of 10% after 4 years. Give journal entries for the year ended 31st March, 2016, assuming that the interest was payable  half-yearly on 30th September and 31st March. Tax is to be deducted @ 10%.

Answer:

Books of XYZ Ltd.
Journal
Date	Particulars		L.F.	Debit Amount `	Credit Amount `
2015
April 01	Bank A/c	Dr.		4,50,000
	To Debenture Application A/c				4,50,000
	(Debenture application money received)
April 01	Debenture Application A/c	Dr.		4,50,000
	Loss on Issue of Debentures A/c	Dr.		1,00,000
	To 10% Debentures A/c				5,00,000
	To Premium on Redemption A/c				50,000
	(5,000 Debentures of ` 100 each issued at 10% discount with the term repayable at a premium of 10%)
2015
Sept. 30	Interest on Debentures A/c	Dr.		25,000
	To Debentureholders’ A/c				22,500
	To Income Tax Payable A/c				2,500
	(Interest due on 10% Debentures)
Sept. 30	Debentureholders’ A/c	Dr.		22,500
	To Bank A/c				22,500
	(Interest on debentures paid to debenture holders)
Sept. 30	Income Tax Payable A/c	Dr.		2,500
	To Bank A/c				2,500
	(Payment of tax on interest on debentures)
2016
March 31	Interest on Debentures A/c	Dr.		25,000
	To Debentureholders’ A/c				22,500
	To Income Tax Payable A/c				2,500
	(Interest due on 10% Debentures)
March 31	Debentureholders’ A/c	Dr.		22,500
	To Bank A/c				22,500
	(Debenture Interest paid to Debenture holders)
March 31	Income Tax Payable A/c	Dr.		2,500
	To Bank A/c				2,500
	(Payment of tax on interest on debentures)
March 31	Profit and Loss A/c	Dr.		50,000
	To Interest on Debentures A/c				50,000
	(Interest on debentures transferred to Profit and Loss Account)

 

Working Note:

 

Interest on Debentures (for half year) = 5,00,000 × 10100 × 612 = ` 25,000

Page No 9.56:

Question 38:

Bright Ltd. issued 5,000; 10% Debentures of  ` 100 each on 1st April, 2015 . The issue was fully subscribed . According to the terms of issue, interest on the debentures is payable half-yearly on 30th  September and 31st March and the tax deducted at source is 10%.
Pass necessary journal entries related to the debenture interest for the year ending 31st March , 2016 and transfer of interest on debentures of the year to the Statement of Profit and Loss .

Answer:

Journal In the books of Bright Ltd.
Date	Particulars		L.F.	Debit Amount (`)	Credit Amount (`)
2016
Mar. 31	Debentures Interest A/c	Dr.		25,000
	To Debenture Holder’s A/c				22,500
	To Income Tax Payable A/c				2,500
	(Debentures interest due)
	Debenture Holder’s A/c	Dr.		22,500
	Income Tax Payable A/c			2,500
	To Bank A/c				25,000
	(Interest on debentures paid)
Mar. 31	Statement of Profit & Loss A/c	Dr.		50,000
	To Debentures Interest A/c				50,000
	(Interest transferred to profit and loss)

Page No 9.56:

Question 39:

On 1st April, 2015, V.V.L.Ltd issued 1,000, 9% Debentures of  ` 100 each at a  discount of 6%, redeemable at a premium of 10% after three years. Pass necessary journal entries for the issue of debentures and debenture interest for the year ended 31st March, 2016, assuming that interest is payable on 30th September and 31st March and the rate of tax deducted at source is 10%. The company closes its books on 31st March every year.

Answer:

Journal
Date	Particulars		L.F.	Debit Amount (`)	Credit Amount (`)
2015
Apr. 01	Bank A/c	Dr.		94,000
	To Debenture Application and Allotment A/c				94,000
	(Money received on the issue of debentures)
	Debenture Application and Allotment A/c	Dr.		94,000
	Loss on Issue of Debentures A/c	Dr.		16,000
	To 9% Debentures A/c				1,00,000
	To Premium on Redemption of Debentures A/c				10,000
	(Debenture application and allotment money transferred to Debentures A/c)
Sept 30	Debenture Interest A/c	Dr.		4,500
	To Debenture holders’ A/c				4,050
	To TDS Payable A/c				450
	(Interest due)
	Debenture holders’ A/c	Dr.		4,050
	To Bank A/c				4,050
	(Payment of interest)
	TDS Payable A/c	Dr.		450
	To Bank A/c				450
	(Payment of tax)
2016
Mar 31	Debenture Interest A/c	Dr.		4,500
	To Debenture holders’ A/c				4,050
	To TDS Payable A/c				450
	(Interest due)
	Debenture holders’ A/c	Dr.		4,050
	To Bank A/c				4,050
	(Payment of interest)
	TDS Payable A/c	Dr.		450
	To Bank A/c				450
	(Payment of tax)

Page No 9.56:

Question 40:

Answer:

In the books of Kitply Ltd. Journal
Date	Particulars			L.F.	Debit Amount `	Credit Amount `
1 April	Bank A/c	Dr.			1,90,000
	To 10% Debenture Application A/c					1,90,000
	(Debenture application money received at 5% discount)
1 April	10% Debenture Application A/c		Dr.		1,90,000
	Discount on Issue of Debentures A/c		Dr.		10,000
	To 10% Debentures A/c					1,00,000
	(Debenture of  ` 2,00,000 issued at 5% Discount with the term payable at 10% premium)
31March	Securities premium reserve A/c              Dr.				10,000
	To Discount on Issue of Debentures A/c					10,000
	(Discount written-off)

 

 

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