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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