Volume-2 | Chapter-2 | Question 41 to 45 | Issue of Debentures | Ts grewal solution 2020-21 | Class-12th

Question 41:

Mercury limited company issued ` 1,00,000, 9% Debentures at a discount of 6% on 1st April, 2017. These debentures are to be redeemed equally, spread over 5 annual installments.

Pass the Journal entries for issue of debentures and writing off the discount.



Answer:

In the books of S. Singh Ltd.

Journal

Date

Particulars

 

L.F.

Debit Amount (`)

Credit Amount (`)

2017

 

 

 

 

 

April 01

Bank A/c

Dr.

 

94,000

 

 

  To Debentures Application & Allotment A/c

 

 

 

94,000

 

(Being application money received on 9% Debentures issued at 6% discount)

 

 

 

 

 

 

 

 

 

 

April 01

Debentures Application & Allotment A/c

Dr.

 

94,000

 

 

Discount on Issue of Debentures A/c

Dr.

 

6,000

 

 

  To 9% Debentures A/c

 

 

 

1,00,000

 

(Being application & allotment money adjusted)

 

 

 

 

2018

 

 

 

 

 

March 31

Statement of Profit & Loss A/c

Dr.

 

6,000

 

 

  To Discount on Issue of Debentures A/c

 

 

 

6,000

 

(Being discount on issue of debentures written off)

 

 

 

 



Page No 9.56:

Question 42:

On 1st January, 2017, Raha Ltd. issued 6,000, 8% Debentures of nominal (face) value of ` 100 each redeemable at 5% premium in equal proportions at the end of 5, 10 and 15 years. It has a balance of ` 10,000 in Securities Premium Reserve.
Pass Journal entries. Also give Journal entries for writing off Loss on Issue of Debentures.



Answer:

In the books of Raha Ltd.

Journal

Date

Particulars

 

L.F.

Debit
Amount
(
`)

Credit
Amount
(
`)

2017

 

 

 

 

 

January 01

Bank A/c (6,000 × 100)

Dr.

 

6,00,000

 

 

  To Debentures Application & Allotment A/c (6,000 × 100)

 

 

 

6,00,000

 

(Being application money received on 8% Debentures issued)

 

 

 

 

 

 

 

 

 

 

January 01

Debentures Application & Allotment A/c

Dr.

 

6,00,000

 

 

Loss on Issue of Debentures A/c

Dr.

 

30,000

 

 

  To 8% Debentures A/c

 

 

 

6,00,000

 

  To Premium on Redemption of Debentures A/c

 

 

 

30,000

 

(Being application & allotment money adjusted along with 5%

 

 

 

 

 

premium payable on redemption)

 

 

 

 

2017

 

 

 

 

 

 December 31

Securities Premium Reserve A/c

Dr.

 

10,000

 

 

Statement of Profit & Loss A/c

Dr.

 

20,000

 

 

  To Loss on Issue of Debentures A/c

 

 

 

30,000

 

(Being loss on issue of debentures written off)

 

 

 

 



Page No 9.56:

Question 43:

Global Ltd. issued 10,000, 8% Debentures of  ` 100 each redeemable in four equal instalments by draw of lots from the end of 3 years at a premium of ` 9.
Pass the Journal entries for writing off the Loss on Issue of Debentures. Also prepare Loss on issue of Debentures Account.



Answer:

In the books of Raha Ltd.

Journal

Date

Particulars

 

L.F.

Debit
Amount
(
`)

Credit
Amount
(
`)

By the end of year of Allotment

Statement of Profit & Loss A/c

Dr.

 

90,000

 

  To Loss on Issue of Debentures A/c

 

 

 

90,000

(Being loss on issue of debentures written off)

 

 

 

 

 

Dr.

Loss on Issue of Debentures A/c

Cr.

Date

Particulars

Amount

(`)

Date

Particulars

Amount

(`)

On the date of Issue

To 8% Debentures A/c

90,000

By the end of Year of allotment

By Statement of Profit & Loss A/c

90,000

 

 

 

 

 

 

 

 

90,000

 

 

90,000

 

 

 

 

 

 



Page No 9.57:

Question 44:



Answer:

 

In the books of Garvit Ltd.

Journal

Date

Particulars

 

L.F.

Debit
Amount
(
`)

Credit
Amount
(
`)

2018

 

 

 

 

 

April 01

Bank A/c (3,600 × 94)

Dr.

 

3,38,400

 

 

  To Debentures Application & Allotment A/c  (3,600 × 94)

 

 

 

3,38,400

 

(Being application money received on 11% Debentures issued at 6%)

 

 

 

 

 

 

 

 

 

 

April 01

Debentures Application & Allotment A/c

Dr.

 

3,38,400

 

 

Discount on Issue of Debentures A/c (3,000×4)

Dr.

 

18,000

 

 

  To 11% Debentures A/c (3,000×100)

 

 

 

3,00,000

  To Bank A/c (600×94)

56,400

 

(Being application & allotment money adjusted)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 31 March 19

Securities Premium Reserve A/c

Dr.

 

10,000

 

 

Statement of Profit & Loss A/c

   Dr.

20,000

 

 

  To Loss on Issue of Debentures A/c

 

 

 

30,000

 

(Being loss on issue of debentures written off)

 

 

 

 

 



Page No 9.57:

Question 45:

On 1st June, 2017, R Energy Ltd. issued 10,000, 7% Debentures of  ` 100 each at a discount of 10% redeemable at a premium of 10% at the end of five years. All the debentures were subscribed and allotment was made.

Prepare the Balance Sheet (extract) as at 31st March, 2018.



Answer:

In the books of R Energy Ltd.

An Extract of Balance Sheet

As at 31st March, 2018

Particulars

Note No.

Amount
(
`)

I. EQUITIES AND LIABILITIES

 

 

   1. Shareholders’ Funds

 

 

       Reserves and Surplus

3

(2,00,000)

  2. Non-Current Liabilities

 

 

      a. Long-term Borrowings

1

10,00,000

      b. Other long-term Liabilities

2

1,00,000

 

 

 

Total

 

9,00,000

 

 

 

II. Assets

 

 

    Current Assets

 

 

    Cash and Cash Equivalents

4

9,00,000

 

 

 

Total

 

9,00,000

 

  Notes to Accounts:

Note
No.

Particulars

 

Amount

(`)

1.

Long-term Borrowings

 

 

 

10,000, 7% Debentures of `100 each issued at

 

10,00,000

 

 

 

 

2.

Other long-term Liabilities

 

 

 

Premium on Redemption of Debentures

 

1,00,000

 

 

 

 

3.

Reserves and Surplus

 

 

 

Statement of Profit & Loss

 

 

 

  Less: Loss on Issue of Debentures written off

(2,00,000)

(2,00,000)

 

 

 

 

4.

Cash and Cash Equivalents

 

 

On 7% debentures @ ` 90 each (10,000 × 90)

9,00,000

 


Click on Below link for more questions of Issue Of Debenture

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