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Numerical Questions Solutions
1. G. Ltd. a listed company issued 75,00,000, 6% debentures of ₹ 50 each at par payable ₹ 15 on application and ₹ 35 on allotment, redeemable at par after 7 years from the date of issue of debentures. Record necessary entries in the books of Company.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
11,25,00,000
To 6% Debentures Application A/c
11,25,00,000
(Being application money received for 75,00,000 debentures @ ₹ 15 per debenture)
6% Debentures Application A/c
Dr.
11,25,00,000
To 6% Debentures A/c
11,25,00,000
(Being application money for 75,00,000 transferred to 6% debentures account)
6% Debentures Allotment A/c
Dr.
26,25,00,000
To 6% Debentures A/c
26,25,00,000
(Being allotment money due on 75,00,000 debentures @ ₹ 35 for each debenture)
Bank A/c
Dr.
26,25,00,000
To 6% Debentures Allotment A/c
26,25,00,000
(Being allotment money received for 75,00,000 debentures)

2. Y. Ltd. issued 2,000, 6% debentures of ₹ 100 each payable as follows: ₹ 25 on application; ₹ 50 on allotment and ₹ 25 on first and final call. Record necessary entries in the books of the company.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
50,000
To 6% Debentures Application A/c
50,000
(Being application money received for 2,000 6% shares @ ₹ 25 each)
6% Debentures Application A/c
Dr.
50,000
To 6% Debentures A/c
50,0000
(Being application money received on 2,000 debentures transferred to 6% debentures account)
6% Debentures Allotment A/c
Dr.
1,00,000
To 6% Debentures A/c
1,00,000
(Being allotment money due on 2,000 6% debentures @ ₹ 50 each)
Bank A/c
Dr.
1,00,000
To 6% Debentures Allotment A/c
1,00,000
(Being allotment money received for 2,000 6% debentures)
6% Debentures First and Final Call A/c
Dr.
50,000
To 6% Debentures A/c
50,000
(Being debenture first and final call money due on 2,000 6% debentures @ ₹ 25 each)
Bank A/c
Dr.
50,000
To 6% Debenture First and Final Call A/c
50,000
(Being First and Final money received for 2,000 6% debentures)

3. A. Ltd. issued 10,000, 10% debentures of ₹ 100 each at a premium of 5% payable as follows:
₹ 10 on Application;
₹ 20 along with premium on allotment and balance on first and final call.
The debentuers were fully subscribed and all money was duly received.
Record necessary Journal entries. Also show how the amount will appear in the balance sheet.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
1,00,000
To 10% Debenture Application A/c
1,00,000
(Being application money received for 10,000 10% debentures @ ₹ 10 each)
10% Debenture Application A/c
Dr.
1,00,000
To 10% Debenture A/c
1,00,000
(Being application money received for 10,000 shares transferred to 10% debenture account)
10% Debenture Allotment A/c
Dr.
2,50,000
To 10% Debentures A/c
2,00,000
To Securities Premium Reserve A/c
50,000
(Being allotment money due on 10,000 10% debentures @ ₹ 25 each including a premium of ₹ 5 per debenture)
Bank A/c
Dr.
2,50,000
To 10% Debentures Allotment A/c
2,50,000
(Being allotment money received on 10,000 10% debentures)
10% Debenture First and Final Call A/c
Dr.
7,00,000
To 10% Debentures A/c
7,00,000
(Being First and Final call money due on 10,000 10% debentures @ ₹ 70 per debenture)
Bank A/c
Dr.
7,00,000
To 10% Debenture First and Final Call A/c
7,00,000
(Being first and final call money received on 10,000 10% debentures)
Balance Sheet of A Ltd.
as on …………
Particulars
Note
No.
Amount
₹
I. Equity and Liabilities
1. Shareholders’ Funds
a. Reserves and Surplus
1
50,000
2. Non-Current Liabilities
Long-term borrowings
2
10,00,000
Total
10,50,000
II. Assets
1. Current Assets
a. Cash and cash equivalents
10,50,000
Note to Accounts:
Note
No.
Particulars
Amount
₹
1
Reserves and surplus
Securities Premium Reserve
50,000
2
Long-term borrowings
10,000, 10% debentures of ₹ 100 each
10,00,000

4. A. Ltd. issued 90,00,000, 9% debenture of ₹ 50 each at a of 8%, redeemable at par any time after 9 years Record necessary entries in the books of A. Ltd., for issue of debentures.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
41,40,00,000
To 9% Debenture Application and Allotment A/c
41,40,00,000
(Being debenture application money received on 90,00,000 9% debentures @ ₹ 46 per debenture)
9% Debenture Application and Allotment A/c
Dr.
41,40,00,000
Discount on Issue of Debentures A/c
Dr.
3,60,00,000
To 9% Debentures A/c
45,00,00,000
(Being application money transferred to 9% debentures account and discount adjusted)
5. A. Ltd. issued 4,000, 9% debentures of ₹ 100 each on the following terms:
₹ 20 on Application;
₹ 20 on Allotment;
₹ 30 on First call; and
₹ 30 on Final call.
The public applied for 4,800 debentures. Applications for 3,600 debentures were accepted in full. Applications for 800 Debentures were allotted 400 debentures and applications for 400 Debentures were rejected. All money called and duly received. Record necessary journal entries.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
96,000
To 9% Debenture Application A/c
96,000
(Being application money received on 4,800 applications @ ₹ 20 per application)
9% Debenture Application A/c
Dr.
96,000
To 9% Debentures A/c
80,000
To 9% Debenture Allotment A/c
8,000
To Bank A/c
8,000
(Being application money received for 4,800 application transferred to 9% debentures account for 4,000 application, application money for 400 application adjusted to the allotment account and the balance returned)
9% Debenture Allotment A/c
Dr.
80,000
To 9% Debentures A/c
80,000
(Being allotment money due on 4,000 9% debentures @ ₹ 20 each)
Bank A/c
Dr.
72,000
To 9% Debentures Allotment A/c
72,000
(Being pending allotment money received for 9% debentures)
9% Debentures First Call A/c
Dr.
1,20,000
To 9% Debentures A/c
1,20,000
(Being first call money due on 4,000 9% debentures @ ₹ 30 each)
Bank A/c
Dr.
1,20,000
To Debentures First Call A/c
1,20,000
(Being first call money received for 4,000 9% debentures @ ₹ 30 each)
9% Debenture Final Call A/c
Dr.
1,20,000
To 9% Debentures A/c
1,20,000
(Being final call money due on 4,000 9% debentures @ ₹ 30 each)
Bank A/c
Dr.
1,20,000
To 9% Debentures Final Call A/c
1,20,000
(Being final call money received on 4,000 9% debentures @ ₹ 30 each)
Working Notes:
Amount due on allotment
= 4,000 × ₹ 20
= ₹ 80,000
Amount adjusted from application money
= 400 × ₹ 20
= ₹ 8,000
Amount received on allotment
= ₹ 80,000 – ₹ 8,000
= ₹ 72,000

6. T. Ltd. offered 2,00,000, 8% debenture of ₹ 500 each on June 30, 2014 at a premium of 10% payable as ₹ 200 on application (including premium) and balance on allotment, redeemable at par after 8 years But application are received for 3,00,000 debentures and the allotment is made on pro-rata basis. All the money due on application and allotment was received. Record necessary entries regarding issue of debentures.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
6,00,00,000
To 8% Debentures Application A/c
6,00,00,000
(Being application money received for 3,00,000 8% Debentures @ ₹ 500)
8% Debentures Application A/c
Dr.
6,00,00,000
To 8% Debentures A/c
3,00,00,000
To Securities and Premium Reserve A/c
1,00,00,000
To 8% Debentures Allotment A/c
2,00,00,000
(Being application money for 2,00,000 debentures transferred to 8% debentures account and the premium adjusted and the balance is transferred to 8% Debentures Allotment account)
8% Debentures Allotment A/c
Dr.
7,00,00,000
To 8% Debentures A/c
7,00,00,000
(Being allotment money due for 2,00,000 debentures @ ₹ 350 per debenture)
Bank A/c
Dr.
5,00,00,000
To 8% Debentures Allotment A/c
5,00,00,000
(Being allotment money pending for the 8% debentures is duly received)

7. X. Ltd. invited applications for the issue of 10,000, 14% debentures of ₹ 100 each payable as to ₹ 20 on application, ₹ 60 on allotment and the balance on call. The company receives applications for 13,500 debentures, out of which applications for 8,000 debentures are allotted in full, applications for 5000 debentures were alloted 40% of received application, and the remaining applications were rejected. The surplus money on partially allotted applications is utilised towards allotment. All the sums due are duly received. Record necessary journal entries regarding issue of debentures.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
2,70,000
To 14% Debentures Application A/c
2,70,000
(Being application money received on 13,500 14% debentures of ₹ 20 each)
14% Debenture Application A/c
Dr.
2,70,000
To 14% Debentures A/c
2,00,000
To 14% Debentures Allotment A/c
60,000
To Bank A/c
10,000
(Being 8,000 full and 2,000 of 5,000 14% debentures application money is transferred to the debentures account, the surplus is adjusted to allotment account and the balance refunded)
14% Debentures Allotment A/c
Dr.
6,00,000
To 14% Debentures A/c
6,00,000
(Being application money due on 10,000 14% Debentures @ ₹ 60 each)
Bank A/c
Dr.
5,40,000
To 14% Debentures Allotment A/c
5,40,000
(Being allotment money pending from the debenture holders is received)
14% Debentures First and Final Call A/c
Dr.
2,00,000
To 14% Debentures A/c
2,00,000
(Being first and final cally money due on 10,000 14% debentures @ ₹ 20 each)
Bank A/c
Dr.
2,00,000
To 14% Debentures First and Final Call A/c
2,00,000
(Being first and final call money received on 10,000 14% debentures @ ₹ 20 each)

8. R. Ltd. offered 20,00,000, 10% debentures of ₹ 200 each at a discount of 7% redeemable at premium of 8% after 9 years Record necessary entries in the books of R. Ltd.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
37,20,00,000
To 10% Debentures Application & Allotment A/c
37,20,00,000
(Being application and allotment money received for 20,00,000 10% debentures @ ₹ 200 each)
10% Debentures Application and Allotment A/c
Dr.
37,20,00,000
Loss on Issue of Debentures A/c
Dr.
6,00,00,000
To 10% Debentures A/c
40,00,00,000
To Premium on Redemption of Debentures A/c
3,20,00,000
(Being 20,00,000 10% debentures alloted 7% discount and 8% premium on redemption)

9. M. Ltd. took over assets of ₹ 9,00,00,000 and liabilities of ₹ 70,00,000 of S.Ltd. and issued 8% debentures of ₹ 100 each. Record necessary entries in the books of M. Ltd.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Sundry Assets A/c
Dr.
9,00,00,000
To Sundry Liabilities A/c
70,00,000
To S Ltd A/c
8,30,00,000
(Being assets and liabilities of M. Ltd. taken over by the business)
S Ltd A/c
Dr.
8,30,00,000
To 8% Debentures A/c
8,30,00,000
(Being 8,30,000 8% Debentures of ₹ 100 each issued to the vendor in in consideration of taking over their business)
Working Notes:
Amount payable to S Ltd
= ₹ 8,30,00,000
No. of debentures issued
{= \dfrac{₹~8,30,00,000}{₹~100}}
= 8,30,000

10. B. Ltd. purchased assets of the book value of ₹ 4,00,000 and took over the liability of ₹ 50,000 from Mohan Bros. It was agreed that the purchase consideration, settled at ₹ 3,80,000, be paid by issuing debentures of ₹ 100 each.
What Journal entries will be made in the following three cases, if debentures are issued: (a) at par; (b) at 10% discount; (c) at premium of 10%? It was agreed that any fraction of debentures be paid in cash.
(a) When the debentures are issued at par:
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Sundry Assets A/c
Dr.
4,00,000
Goodwill A/c
Dr.
30,000
To Sundry Liabilities A/c
50,000
To Mohan Bros. A/c
3,80,000
(Being assets and liabilities of Mohan Bros. taken over by the business)
Mohan Bros A/c
Dr.
3,80,000
To Debentures A/c
3,80,000
(Being 3,800 debentures each of ₹ 100 issued to Mohan Bros in consideration of taking over their business)
Working Notes:
Actual Amount payable
= Assets – Liabilities
= ₹ 4,00,000 – ₹ 50,000
= ₹ 3,50,000
Settlement Amount
= ₹ 3,80,000
Goodwill
= ₹ 3,80,000 – ₹ 3,50,000
= ₹ 30,000
No. of Debentures issued
{= \dfrac{₹~3,80,000}{₹~100}}
= 3,800
(b) When debentures are issued at 10% discount:
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Sundry Assets A/c
Dr.
4,00,000
Goodwill A/c
Dr.
30,000
To Sundry Liabilities A/c
50,000
To Mohan Bros A/c
3,80,000
(Being assets and liabilities of Mohan Bros. taken over by the business)
Mohan Bros. A/c
Dr.
3,80,000
Discount on Issue of Debentures A/c
Dr.
42,220
To Debentures A/c
4,22,200
To Bank A/c
20
(Being 4,222 debentures of ₹ 100 each issued at 10% discount and balance i.e. ₹ 20 is paid in cash to Mohan Bros.)
Working Notes:
No. of debentures issued
{= \dfrac{₹~3,80,000}{₹~90}}
≅ 4,222
Note: Debentures can not be issued in fractions. So, the number of debentures is rounded to the nearest value of 4,222.
c) When the debentures are issued at 10% premium
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Sundry Assets A/c
Dr.
4,00,000
Goodwill A/c
Dr.
30,000
To Sundry Liabilities A/c
50,000
To Mohan Bros A/c
3,80,000
(Being assets and liabilities of Mohan Bros. taken over by the business)
Mohan Bros A/c
Dr.
3,80,000
To Debentures A/c
3,45,400
To Securities Premium Reserve A/c
34,540
To Bank A/c
60
(Being 3,454 debentures issued at 10% premium and the balance i.e. ₹ 60 is paid in cash to Mohan Bros.)
Working Notes:
No. of debentures issued
{= \dfrac{₹~3,80,000}{₹~110}}
≅ 3,454
Note: Debentures can not be issued in fractions. So, the number of debentures is rounded to the nearest value of 3,454.

11. X. Ltd. purchased a Machinery from Y. Ltd. at an agreed purchase consideration of ₹ 4,40,000 to be satisfied by the issue of 12% debentures of ₹ 100 each at a premium of Rs. 10 per debenture. Journalise the transactions.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Machinery A/c
Dr.
4,40,000
To Y. Ltd. A/c
4,40,000
(Being machinery purchased on credit from Y Ltd.)
Y Ltd. A/c
Dr.
4,40,000
To 12% Debentures A/c
4,00,000
To Securities Premium Reserve A/c
40,000
(Being 4,000 12% debentures each of ₹ 100 issued @ 10% premium)
Working Notes:
Amount Payable
= ₹ 4,40,000
No. of Debentures to be issued
{= \dfrac{₹~4,40,000}{₹~110}}
= 4,000

12. X. Ltd. issued 15,000, 10% debentures of ₹ 100 each. Give journal entries and present it in the balance sheet in each of the following cases:
(i)
The debentures are issued at a premium of 10%;
(ii)
The debentures are issued at a discount of 5%;
(iii)
The debentures are issued as a collateral security to bank against a loan of ₹ 12,00,000; and
(iv)
The debentures are issued to a supplier of machinery costing ₹ 13,50,000.
(i) When the debentures are issued at a premium of 10%
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
16,50,000
To 10% Debentures A/c
15,00,000
To Securities Premium Reserve A/c
1,50,000
(Being 15,000 10% debentures each of ₹ 100 issued @ 10% premium)
Balance Sheet of X Ltd.
Particulars
Note
No.
Amount
₹
I. Equities and Liabilities
1. Shareholders’ Funds
a. Reserves and Surplus
1
1,50,000
2. Non-Current Liabilities
a. Long-Term Borrowings
2
15,00,000
3. Current Liabilities
Total
16,50,000
II. Assets
1. Non-Current Assets
2. Current Assets
Cash and Cash Equivalents
3
16,50,000
Total
16,50,000
Notes to Accounts:
Note
No.
Particulars
Amount
₹
1
Reserves and Surplus
Securities Premium
1,50,000
2
Long-Term Borrowings
10% Debentures (Secured)
15,00,000
3
Cash and Cash Equivalents
Cash at Bank
16,50,000
(ii) When the debentures are issued at 5% discount
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
14,25,000
Discount on Issue of Debentures A/c
Dr.
75,000
To 10% Debentures A/c
15,00,000
(Being 15,000 10% debentures each of ₹ 100 issued @ 5% discount)
Balance Sheet of X Ltd.
Particulars
Note
No.
Amount
₹
I. Equities and Liabilities
1. Shareholders’ Funds
2. Non-Current Liabilities
a. Long-Term Borrowings
1
15,00,000
3. Current Liabilities
Total
15,00,000
II. Assets
1. Non-Current Assets
Other Non-Current Assets
2
75,000
2. Current Assets
Cash and Cash Equivalents
3
14,25,000
Total
15,00,000
Notes to Accounts:
Note
No.
Particulars
Amount
₹
1
Long-Term Borrowings
10% Debentures
15,00,000
2
Other Non-Current Assets
Discount on Issue of Debentures
75,000
3
Cash and Cash Equivalents
Cash at Bank
14,25,000
iii) When the debentures are issued as a collateral security to bank against a loan of ₹ 12,00,000
No entry is made in the books of accounts since no liability is created by such issue. However, on the liability side of the balance sheet, below the item of loan, a note to the effect that it has been secured by issue of debentures as a collateral security is appended.
Balance Sheet of X Ltd.
Particulars
Note
No.
Amount
₹
I. Equities and Liabilities
1. Shareholders’ Funds
2. Non-Current Liabilities
a. Long-Term Borrowings
1
12,00,000
3. Current Liabilities
Total
12,00,000
II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents
2
12,00,000
Total
12,00,000
Notes to Accounts:
Note
No.
Particulars
Amount
₹
1
Long-Term Borrowings
Bank Loan (Secured against issue of Debentures of ₹ 12,00,000
12,00,000
2
Cash and Cash Equivalents
Cash at Bank
12,00,000
Second/Alternate Method
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Debenture Suspense A/c
Dr.
15,00,000
To 10% Debentures A/c
15,00,000
(Being 15,000 10% debentures each of ₹ 100 issued as a collateranl security against a bank loan of ₹ 12,00,000)
Balance Sheet of X Ltd.
Particulars
Note
No.
Amount
₹
I. Equities and Liabilities
1. Shareholders’ Funds
2. Non-Current Liabilities
a. Long-Term Borrowings
1
12,00,000
3. Current Liabilities
Total
12,00,000
II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents
2
12,00,000
Total
12,00,000
Notes to Accounts:
Note
No.
Particulars
Amount
₹
1
Long-Term Borrowings
Bank Loan
12,00,000
10% Debentures
15,00,000
Debentures Suspense Account
15,00,000
–
2
Cash and Cash Equivalents
Cash at Bank
12,00,000
iv) When the debentures are issued to a supplier of machinery
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Machinery A/c
Dr.
13,50,000
To Vendor A/c
13,50,000
(Being machinery purchased from the vendor on credit)
Vendor A/c
Dr.
13,50,000
Discount on Issue of Debentures A/c
Dr.
1,50,000
To 10% Debentures A/c
15,00,000
(Being 15,000 10% debentures each of ₹ 100 issued @ 10% discount in consideration of the machinery worth of ₹ 13,50,000)
Balance Sheet of X Ltd.
Particulars
Note
No.
Amount
₹
I. Equities and Liabilities
1. Shareholders’ Funds
2. Non-Current Liabilities
a. Long-Term Borrowings
1
15,00,000
3. Current Liabilities
Total
15,00,000
II. Assets
1. Non-Current Assets
a. Fixed Assets
i. Tangible Assets
2
13,50,000
b. Other Non-Current Assets
3
1,50,000
2. Current Assets
Total
15,00,000
Notes to Accounts:
Note
No.
Particulars
Amount
₹
1
Long-Term Borrowings
10% Debentures
15,00,000
2
Tangible Assets
Plant and Machinery
13,50,000
3
Other Non-Current Assets
Discount on Issue of Debentures
1,50,000
13. Journalise the following:
(i)
A debenture issued at ₹ 95, repayable at ₹ 100;
(ii)
A debenture issued at ₹ 95, repayable at ₹ 105; and
(iii)
A debenture issued at ₹ 100, repayable at ₹ 105;
The face value of debenture in each of the above cases is ₹ 100.
(i) When the debentures are issued at ₹ 95 and repayable at ₹ 105
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
95
Discount on Issue of Debentures A/c
Dr.
5
To Debentures A/c
100
(Being debentures of face value ₹ 100 issued at a discounted price of ₹ 95 and repayable at par i.e. @ ₹ 100)
(ii) When the debentures are issued at ₹ 95 and repayable at ₹ 105
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
95
Loss in Issue of Debentures A/c
Dr.
10
To Debentures A/c
100
To Premium on Redemption of Debentures A/c
5
(Being debentures of face value ₹ 100 issued at a discounted price of ₹ 95 and repayable @ ₹ 105)
(iii) When the debentures are issued at ₹ 100 and replayable at ₹ 105
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
100
Loss on Issue of Debentures A/c
Dr.
5
To Debentures A/c
100
To Premium on Redemption of Debentures A/c
5
(Being debentures of face value ₹ 100 issued at par and redeemable @ ₹ 105)
14. A. Ltd. issued 50,00,000, 8% debentures of ₹ 100 at a discount of 6% on April 01, 2018, redeemable at premium of 4% by draw of lots as under:
20,00,000 debentures on March, 2020
10,00,000 debentures on March, 2021
20,00,000 debentures on March, 2022
Record journal entries for issue of debuntures. Prepare discount/loss on issue of debenture account.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Bank A/c
Dr.
47,00,00,000
To 8% Debentures Application and Allotment A/c
47,00,00,000
(Being application and allotment money received for 50,00,000 8% Debentures of face value ₹ 100 issued @ 6% discount)
8% Debentures Application and Allotment A/c
Dr.
47,00,00,000
Loss on Issue of Debentures A/c
Dr.
5,00,00,000
To 8% Debentures A/c
50,00,00,000
To Premium on Redemption of Debentures A/c
2,00,00,000
(Being 50,00,000 8% debentures application and allotment money is transferred to 8% Debentures account and discount and premium on redemption of debentures adjusted)
Date
Debentures Outstanding
₹
Ratio
Loss to be written off
(during this year)
₹
Mar 31, 2019
5,00,00,000
5
{5,00,00,000 × \dfrac{5}{15}}
= 1,66,66,667
Mar 31, 2020
5,00,00,000
5
{5,00,00,000 × \dfrac{5}{15}}
= 1,66,66,667
Mar 31, 2021
3,00,00,000
3
{5,00,00,000 × \dfrac{3}{15}}
= 1,00,00,000
Mar 31, 2022
2,00,00,000
2
{5,00,00,000 × \dfrac{2}{15}}
= 66,66,667
15
5,00,00,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2018
2019
Apr 1
To 8% Debentures A/c
3,00,00,000
Mar 31
By Statement of Profit and Loss A/c
1,66,66,667
Apr 1
To Premium on Redemption of Debentures A/c
2,00,00,000
Mar 31
By Balance c/d
3,33,33,333
5,00,00,000
5,00,00,000
2019
2020
Apr 1
To Balance b/d
3,33,33,333
Mar 31
By Statement of Profit and Loss A/c
1,66,66,667
Mar 31
By Balance c/d
1,66,66,667
3,33,33,333
3,33,33,333
2020
2021
Apr 1
To Balance b/d
1,66,66,667
Mar 31
By Statement of Profit and Loss A/c
1,00,00,000
Mar 31
By Balance c/d
66,66,667
1,66,66,667
1,66,66,667
2021
2022
Apr 1
By Balance b/d
66,66,667
Mar 31
By Statement of Profit and Loss A/c
66,66,667
66,66,667
66,66,667
15. A listed company issues the following debentures:
(i)
10,000, 12% debentures of ₹ 100 each at par but redeemable at premium of 5% after 5 years;
(ii)
10,000, 12% debentures of ₹ 100 each at a discount of 10% but redeemable at par after 5 years;
(iii)
5,000, 12% debentures of ₹ 1000 each at a premium of 5% but redeemable at par after 5 years;
(iv)
1,000, 12% debentures of ₹ 100 each issued to a supplier of machinery costing ₹ 95,000. The debentures are repayable after 5 years; and
(v)
300, 12% debentures of ₹ 100 each as a collateral security to a bank which has advanced a loan of ₹ 25,000 to the company for a period of 5 years
Pass the journal entries to record the: (a) issue of debentures; and (b) repayment of debentures after the given period.
(a) Journal Entries for Issue of Debentures
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
(i)
Bank A/c
Dr.
10,00,000
To 12% Debentures Application and Allotment A/c
10,00,000
(Being application and allotment money received for 10,000 12% debentures @ ₹ 100 each)
12% Debenture Application and Allotment A/c
Dr.
10,00,000
Loss on Issue of Debentures A/c
Dr.
50,000
To 12% Debentures A/c
10,00,000
To Premium on Redemption of Debentures A/c
50,000
(Being application and allotment money of 10,000 12% debentures each of ₹ 100 transferred to Debentures account and the debentures are redeemable @ 5% premium)
(ii)
Bank A/c
Dr.
9,00,000
To 12% Debentures Application and Allotment A/c
9,00,000
(Being application money received for 10,000 12% debentures @ ₹ 100 per debenture and @ 10% discount per debenture)
12% Debenture Application and Allotment A/c
Dr.
9,00,000
Discount on Issue of Debentures A/c
Dr.
1,00,000
To 12% Debentures A/c
10,00,000
(Being application and allotment money transferred to the debentures account and debentures are issued)
(iii)
Bank A/c
Dr.
52,50,000
To 12% Debenture Application and Allotment A/c
52,50,000
(Being application and allotment money received for 5,000 12% debenturs @ ₹ 1,000 per debenture at a premium of 5%)
Debenture Application and Allotment A/c
Dr.
52,50,000
To 12% Debentures A/c
50,00,000
To Securities Premium Reserve A/c
2,50,000
(Being the application and allotment money transferred to the debentures account and securities premium reserve is adjusted)
(iv)
Machinery A/c
Dr.
95,000
To Vendor A/c
95,000
(Being machinery purchased on credit from the vendor)
Vendor A/c
Dr.
95,000
Discount on Issue of Debentures A/c
Dr.
5,000
To 12% Debentures A/c
1,00,000
(Being liability of the vendor is adjusted through issue of debentures at a discount)
(v)
12% Debentures Suspense A/c
Dr.
30,000
To 12% Debentures A/c
30,000
(Being 300 12% debentures each of ₹ 100 issued to the bank as a collateral security against a loan of ₹ 25,000)
(b) Journal Entries for Repayment of Debentures
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
(i)
12% Debentures A/c
Dr.
10,00,000
Premium on Redemption of Debentures A/c
Dr.
50,000
To Debenture Holders A/c
10,50,000
(Being amount due on redemption of debentures)
Debenture Holders A/c
Dr.
10,50,000
To Bank A/c
10,50,000
(Being payment made to debenture holders)
(ii)
12% Debentures A/c
Dr.
10,00,000
To Debenture Holders A/c
10,00,000
(Being amount due on redemption of debentures)
Debenture Holders A/c
Dr.
10,00,000
To Bank A/c
10,00,000
(Being payment made to debenture holders)
(iii)
12% Debentures A/c
Dr.
50,00,000
To Debenture Holders A/c
50,00,000
(Being amount due on redemption of debentures)
Debenture Holders A/c
Dr.
50,00,000
To Bank A/c
50,00,000
(Being payment made to debenture holders)
(iv)
12% Debentures A/c
Dr.
1,00,000
To Vendor A/c
1,00,000
(Being payment due to vendor)
Vendor A/c
Dr.
1,00,000
To Bank A/c
1,00,000
(Being payment done to debenture holders)
(v)
12% Debentures A/c
Dr.
30,000
To Debenture Suspense A/c
30,000
(Being debenture and debentures suspense account closed)
16. A listed company issued debentures of the face value of ₹ 5,00,000 at a discount of 6% on April 01, 2014. These debentures are redeemable by annual drawings of ₹ 1,00,000 made on March 31 each year starting from March 31, 2016.
Give journal entries for issue of debuntures, writing-off discount and regarding redemption of debentures.
Issue of Debentures:
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2014
Apr 1
Bank A/c
Dr.
4,70,000
To Debentures Application and Allotment A/c
4,70,000
(Being application and allotment money received)
Debentures Application and Allotment A/c
Dr.
4,70,000
Discount on Issue of Debentures A/c
Dr.
30,000
To Debentures A/c
5,00,000
(Being debentures application and allotment money transferred to debentues account)
Working Notes:
Face Value of Debentures
= ₹ 5,00,000
Discount
{= ₹~5,00,000 × \dfrac{6}{100}}
= ₹ 30,000
Discount Write-off calculation:
Date
Debentures
Outstanding
₹
Ratio
Amount
Written-off
each year
₹
Mar 31, 2015
5,00,000
5
{30,000 × \dfrac{5}{20}}
= 7,500
Mar 31, 2016
5,00,000
5
{30,000 × \dfrac{5}{20}}
= 7,500
Mar 31, 2017
4,00,000
4
{30,000 × \dfrac{4}{20}}
= 6,000
Mar 31, 2018
3,00,000
3
{30,000 × \dfrac{3}{20}}
= 4,500
Mar 31, 2019
2,00,000
2
{30,000 × \dfrac{2}{20}}
= 3,000
Mar 31, 2020
1,00,000
1
{30,000 × \dfrac{1}{20}}
= 1,500
20
30,000
Writing-off Discount:
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2015
Mar 31
Profit and Loss A/c
Dr.
7,500
To Discount on Issue of Debentures A/c
7,500
(Being discount on issue of debentures written-off)
2016
Mar 31
Profit and Loss A/c
Dr.
7,500
To Discount on Issue of Debentures A/c
7,500
(Being discount on issue of debentures written-off)
2017
Mar 31
Profit and Loss A/c
Dr.
6,000
To Discount on Issue of Debentures A/c
6,000
(Being discount on issue of debentures written-off)
2018
Mar 31
Profit and Loss A/c
Dr.
4,500
To Discount on Issue of Debentures A/c
4,500
(Being discount on issue of debentures written-off)
2019
Mar 31
Profit and Loss A/c
Dr.
3,000
To Discount on Issue of Debentures A/c
3,000
(Being discount on issue of debentures written-off)
2020
Mar 31
Profit and Loss A/c
Dr.
1,500
To Discount on Issue of Debentures A/c
1,500
(Being discount on issue of debentures written-off)
Redemption of Debentures:
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2016
Mar 31
Debentures A/c
Dr.
1,00,000
To Debenture Holders A/c
1,00,000
(Being amount due to debenture holders on redemption of debentures)
Debenture Holders A/c
Dr.
1,00,000
To Bank A/c
1,00,000
(Being money paid to debenture holders on redemption)
2017
Mar 31
Debentures A/c
Dr.
1,00,000
To Debenture Holders A/c
1,00,000
(Being amount due to debenture holders on redemption of debentures)
Debenture Holders A/c
Dr.
1,00,000
To Bank A/c
1,00,000
(Being money paid to debenture holders on redemption)
2018
Mar 31
Debentures A/c
Dr.
1,00,000
To Debenture Holders A/c
1,00,000
(Being amount due to debenture holders on redemption of debentures)
Debenture Holders A/c
Dr.
1,00,000
To Bank A/c
1,00,000
(Being money paid to debenture holders on redemption)
2019
Mar 31
Debentures A/c
Dr.
1,00,000
To Debenture Holders A/c
1,00,000
(Being amount due to debenture holders on redemption of debentures)
Debenture Holders A/c
Dr.
1,00,000
To Bank A/c
1,00,000
(Being money paid to debenture holders on redemption)
2020
Mar 31
Debentures A/c
Dr.
1,00,000
To Debenture Holders A/c
1,00,000
(Being amount due to debenture holders on redemption of debentures)
Debenture Holders A/c
Dr.
1,00,000
To Bank A/c
1,00,000
(Being money paid to debenture holders on redemption)
17. B. Ltd. a listed company issued debentures at 94% for ₹ 4,00,000 on April 01, 2011 repayable by five equal drawings of ₹ 80,000 each. The company prepares its final accounts on March 31 every year. Give Journal entries for issues and redemption of debentures.
Issue of Debentures:
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2011
Apr 1
Bank A/c
Dr.
3,76,000
To Debentures Application and Allotment A/c
3,76,000
(Being application and allotment money received)
Debentures Application and Allotment A/c
Dr.
3,76,000
Discount on Issue of Debentures A/c
Dr.
24,000
To Debentures A/c
4,00,000
(Being debentures application and allotment money transferred to debentures account)
Writing-off Discount:
Working Notes:
% Discount
= 100% – 94%
= 6%
Discount
{= ₹~4,00,000 × \dfrac{6}{100}}
= ₹ 24,000
Date
Debentures
Outstanding
₹
Ratio
Amount
Written-off
each year
₹
Mar 31, 2012
4,00,000
5
{24,000 × \dfrac{5}{15}}
= 8,000
Mar 31, 2013
3,20,000
4
{24,000 × \dfrac{4}{15}}
= 6,400
Mar 31, 2014
2,40,000
3
{24,000 × \dfrac{3}{15}}
= 4,800
Mar 31, 2015
1,60,000
2
{24,000 × \dfrac{2}{15}}
= 3,200
Mar 31, 2016
80,000
1
{24,000 × \dfrac{1}{15}}
= 1,600
15
24,000
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2012
Mar 31
Profit and Loss A/c
Dr.
8,000
To Discount on Issue of Debentures A/c
8,000
(Being discount on issue of debentures written-off)
2013
Mar 31
Profit and Loss A/c
Dr.
6,400
To Discount on Issue of Debentures A/c
6,400
(Being discount on issue of debentures written-off)
2014
Mar 31
Profit and Loss A/c
Dr.
4,800
To Discount on Issue of Debentures A/c
4,800
(Being discount on issue of debentures written-off)
2015
Mar 31
Profit and Loss A/c
Dr.
3,200
To Discount on Issue of Debentures A/c
3,200
(Being discount on issue of debentures written-off)
2016
Mar 31
Profit and Loss A/c
Dr.
1,600
To Discount on Issue of Debentures A/c
1,600
(Being discount on issue of debentures written-off)
Redemption of Debentures:
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2012
Mar 31
Debentures A/c
Dr.
80,000
To Debenture Holders A/c
80,000
(Being amount due to debenture holders on redemption of debentures)
Debenture Holders A/c
Dr.
80,000
To Bank A/c
80,000
(Being amount paid to debenture holders on redemption of debentures)
2013
Mar 31
Debentures A/c
Dr.
80,000
To Debenture Holders A/c
80,000
(Being amount due to debenture holders on redemption of debentures)
Debenture Holders A/c
Dr.
80,000
To Bank A/c
80,000
(Being amount paid to debenture holders on redemption of debentures)
2014
Mar 31
Debentures A/c
Dr.
80,000
To Debenture Holders A/c
80,000
(Being amount due to debenture holders on redemption of debentures)
Debenture Holders A/c
Dr.
80,000
To Bank A/c
80,000
(Being amount paid to debenture holders on redemption of debentures)
2014
Mar 31
Debentures A/c
Dr.
80,000
To Debenture Holders A/c
80,000
(Being amount due to debenture holders on redemption of debentures)
Debenture Holders A/c
Dr.
80,000
To Bank A/c
80,000
(Being amount paid to debenture holders on redemption of debentures)
2015
Mar 31
Debentures A/c
Dr.
80,000
To Debenture Holders A/c
80,000
(Being amount due to debenture holders on redemption of debentures)
Debenture Holders A/c
Dr.
80,000
To Bank A/c
80,000
(Being amount paid to debenture holders on redemption of debentures)
18. B. Ltd. issued 1,000, 12% debentures of ₹ 100 each on April 01, 2014 at a discount of 5% redeemable at a premium of 10%.
Give journal entries relating to the issue of debentures and debentures interest for the period ending March 31, 2015 assuming that interest is paid half-yearly on September 30 and March 31 and tax deducted at source is 10%.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2014
Apr 1
Bank A/c
Dr.
95,000
To 12% Debentures Application and Allotment A/c
95,000
(Being application and allotment money received for 1,000 12% debentures @ ₹ 100 each @ 5% discount)
12% Debentures Application and Allotment A/c
Dr.
95,000
Loss on Issue of Debentures A/c
Dr.
15,000
To 12% Debentures A/c
1,00,000
To Premium on Redemption of Debentures A/c
10,000
(Being debenture application and allotment money transferred to 12% debentures account and discount and premium on issue of debentures adjusted)
Sep 30
Debenture Interest A/c
Dr.
6,000
To Income Tax Payable A/c
600
To Debenture Holders A/c
5,400
(Being interest @ 12% on ₹ 1,00,000 debentures for 6 months and tax deducted at source)
Income Tax Payable A/c
Dr.
600
To Bank A/c
600
(Being income tax paid)
Debenture Holders A/c
Dr.
5,400
To Bank A/c
5,400
(Being interest amount paid to the debenture holders)
2015
Mar 31
Debenture Interest A/c
Dr.
6,000
To Income Tax Payable A/c
600
To Debenture Holders A/c
5,400
(Being interest @ 12% on ₹ 1,00,000 debentures for 6 months and tax deducted at source)
Income Tax Payable A/c
Dr.
600
To Bank A/c
600
(Being income tax paid)
Debenture Holders A/c
Dr.
5,400
To Bank A/c
5,400
(Being interest amount paid to the debenture holders)
Profit and Loss A/c
Dr.
12,000
To Debenture Interest A/c
12,000
(Being Interest on Debentures transferred to Profit and Loss account)
19. Jay Kay Ltd. an ‘other listed company’ issued 60,000 12% debentures of ₹ 100 each at par redeemable at the end of 5 years at a premium of 20%. On this date, there existed a balance of ₹ 5,00,000 in securities premium reserve account. The company created the required amount of debenture redemption reserve in 3 equal instalments on March 31, 2017, 2018 and 2019. It invested in specified securities (DRI) the required amount on April, 01 of the financial year Debentures were duly redeemed on the record necessary journal entries for :
(i)
Issue of debentures
(ii)
Writing off loss on issue of debentures.
(iii)
Interest and debentures for 2015-16 assuring if is paid annually & tax deducted at service is 10%.
(iv)
Regarding redemption of debentures.
i. Journal entries for Issue of Debentures:
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2015
Apr 1
Bank A/c
Dr.
60,00,000
To 12% Debentures Application and Allotment A/c
60,00,000
(Being application and allotment money received for 60,000 12% debentures @ ₹ 100 per debenture)
12% Debenture Application and Allotment A/c
Dr.
60,00,000
Loss on Issue of Debentures A/c
Dr.
12,00,000
To 12% Debentures A/c
60,00,000
To Premium on Redemption of Debentures A/c
12,00,000
(Being application and allotment money transferred to 12% Debentures account and loss on issue of debentures and premium on redemption of debentures adjusted)
ii. Writing off loss on issue of debentures
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2020
Mar 31
Securities Premium Reserve A/c
Dr.
5,00,000
Profit and Loss A/c
Dr.
7,00,000
To Loss on Issue of Debentures A/c
12,00,000
(Being discount on issue of debentures written-off)
iii. Interest on Debentures for 2015-16
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2016
Mar 31
Debenture Intrest A/c
Dr.
7,20,000
To Income Tax Payable A/c
72,000
To Debenture Holders A/c
6,48,000
(Being amount due for interest @ 12% on ₹ 60,00,000 debentures and tax)
Income Tax Payable A/c
Dr.
72,000
To Bank A/c
72,000
(Being income tax due on interest amount is paid out)
Debenture Holders A/c
Dr.
6,48,000
To Bank A/c
6,48,000
(Being interest amount paid to debenture holders)
iv. Redemption of Debentures
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2017
Mar 31
Profit and Loss A/c
Dr.
2,00,000
To Debenture Redemption Reserve A/c
2,00,000
(Being first installment of debenture redemption reserve)
2018
Mar 31
Profit and Loss A/c
Dr.
2,00,000
To Debenture Redemption Reserve A/c
2,00,000
(Being second installment of debenture redemption reserve)
2019
Mar 31
Profit and Loss A/c
Dr.
2,00,000
To Debenture Redemption Reserve A/c
2,00,000
(Being third installment of debenture redemption reserve)
Apr 1
Debenture Redemption Investment A/c
Dr.
9,00,000
To Bank A/c
9,00,000
(Being 15% of 60,000 12% debentures invested in the debentures redemption investment account)
2020
Mar 31
Bank A/c
Dr.
9,00,000
To Debenture Redemption Investment A/c
9,00,000
(Being debenture redemption investment amount encashed at the time of redemption)
12% Debentures A/c
Dr.
60,00,000
Premium on Redemption of Debentures A/c
Dr.
12,00,000
To Debenture Holders A/c
72,00,000
(Being amount due on redemption of debentures)
Debenture Holders A/c
Dr.
72,00,000
To Bank A/c
72,00,000
(Being amount paid to debenture holders)
Debenture Redemption Reserve A/c
Dr.
6,00,000
To General Reserve A/c
6,00,000
(Being debenture redemption reserve transferred to General Reserve)
Working Notes:
Total Debentures
= ₹ 60,00,000
Debenture Redemption Reserve
= 10% of ₹ 60,00,000
{= ₹~60,00,000 × \dfrac{10}{100}}
= ₹ 6,00,000
No. of installments
= 3
Each installment
{= \dfrac{₹~6,00,000}{3}}
= ₹ 2,00,000
20. Madhur Ltd., has outstanding 9% debentures of ₹ 50,00,000 redeemable at par on January 01, 2020. Debenture Redemption Reserve of ₹ 2,00,000 on March 31, 2018 and balance of required amount of DRR was created on March 31, 2019. The company invested in specified securities (DRI) the required amount on April 01, 2019. Debentures were redeemed on the due date. Record necessary journal entries in the books of the company and also prepare the ledger accounts (ignore interest).
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2019
Mar 31
Surplus i.e. Balance of Profit and Loss A/c
Dr.
3,00,000
To Debenture Redemption Reserve A/c
3,00,000
(Being balance of DRR created to make it equal to 10% of outstanding debentures)
Apr 1
Debenture Redemption Investment A/c
Dr.
7,50,000
To Bank A/c
7,50,000
(Being DRI equal to 15% of the debentures to be redeemed is created)
2020
Jan 1
Bank A/c
Dr.
7,50,000
To Debenture Redemption Investment A/c
7,50,000
(Being DRI encashed at the time of redemption of debentures)
9% Debentures A/c
Dr.
50,00,000
To Debenture Holders A/c
50,00,000
(Being amount due on redemption of debentures)
Debenture Holders A/c
Dr.
50,00,000
To Bank A/c
50,00,000
(Being amount paid to debenture holders)
Debenture Redemption Reserve A/c
Dr.
5,00,000
To General Reserve A/c
5,00,000
(Being DRR transferred to general reserve)
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2019
2018
Mar 31
To Balance c/d
5,00,000
Apr 1
By Balance b/d
2,00,000
2019
Mar 31
By Profit and Loss A/c
3,00,000
5,00,000
5,00,000
2020
2019
Jan 1
To General Reserve A/c
5,00,000
Apr 1
By Balance b/d
5,00,000
5,00,000
5,00,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2019
2020
Apr 1
To Bank A/c
7,50,000
Jan 1
By Bank A/c
7,50,000
7,50,000
7,50,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2020
2020
Mar 31
To Balance c/d
5,00,000
Jan 1
By Debenture Redemption Reserve A/c
5,00,000
5,00,000
5,00,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
2020
2019
Jan 1
To Debenture Redemption Investment A/c
7,50,000
Apr 1
By Debenture Redemption Investment A/c
7,50,000
2020
Mar 31
To Balance c/d
50,00,000
Jan 1
By Debenture Holders A/c
50,00,000
57,50,000
57,50,000
21. MK Ltd. has outstanding ₹ 30,000 11% debentures of ₹ 100 each redeemable at 10% premium as follows :
March 31, 2018 – 10,000 debentures
March 31, 2019 – 12,000 debentures
March 31, 2020 – Remaining debentures
Pass necessary journal entries in the books of the company.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2018
Mar 31
11% Debentures A/c
Dr.
10,00,000
Premium on Redemption of Debentures A/c
Dr.
1,00,000
To Debenture Holders A/c
11,00,000
(Being the amount due for redemption of 10,000 11% debentures each of ₹ 100 at par value at a premium of 10%)
Debenture Holders A/c
Dr.
11,00,000
To Bank A/c
11,00,000
(Being payment done to debenture holders on redemption of debentures)
2019
Mar 31
11% Debentures A/c
Dr.
12,00,000
Premium on Redemption of Debentures A/c
Dr.
1,20,000
To Debenture Holders A/c
13,20,000
(Being the amount due for redemption of 12,000 11% debentures each of ₹ 100 at par value at a premium of 10%)
Debenture Holders A/c
Dr.
13,20,000
To Bank A/c
13,20,000
(Being payment done to debenture holders on redemption of debentures)
2020
Mar 31
11% Debentures A/c
Dr.
8,00,000
Premium on Redemption of Debentures A/c
Dr.
80,000
To Debenture Holders A/c
8,80,000
(Being the amount due for redemption of 10,000 11% debentures each of ₹ 100 at par value at a premium of 10%)
Debenture Holders A/c
Dr.
8,80,000
To Bank A/c
8,80,000
(Being payment done to debenture holders on redemption of debentures)
22. X Ltd. had outstanding 20,000 12% debentures of ₹ 100 each redeemable on June 30, 2019. Record necessary journal entries at the time of redemption.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2019
Jun 30
12% Debentures A/c
Dr.
20,00,000
To Debenture Holders A/c
20,00,000
(Being amount due on redemption of 20,000 12% debentures of ₹ 100 each)
Debenture Holders A/c
Dr.
20,00,000
To Bank A/c
20,00,000
(Being payment done to debenture holders on redemption of debentures)
23. XYZ Ltd. Issued 6,000, 12% Debentures of ₹ 50 each on April 1, 2014. Interest on these debenture is payable annually 31st March each year. The debentures are redeemable in four equal installments at end of third, fourth, fifth and sixth year. You are required to prepare journal entries at the time of issue and redemption of debentures in the books of the company under following cases:
(i)
Debentures are issued at par and redeemable at par.
(ii)
Debentures are issued at a premium of 10% and redeemable at par.
(iii)
Debentures are issued at a discount of 10% and redeemable at par.
(iv)
Debenture are issued at par but redeemable at a premium of 10%.
(v)
Debentures are issued at a premium of 10% and redeemable at premium of 10%.
(vi)
Debenture are issued at a discount of 10% and redeemable at a premium of 10%.
(i) Debentures are issued at par and redeemable at par.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2014
Apr 1
Bank A/c
Dr.
3,00,000
To Debenture Application and Allotment A/c
3,00,000
(Being application and allotment money received for 6,000 12% debentures each of ₹ 50)
Debenture Application and Allotment A/c
Dr.
3,00,000
To 12% Debentures A/c
3,00,000
(Being application money transferred to the debentures account)
2015
Mar 31
Debenture Interest A/c
Dr.
36,000
To Debenture Holders A/c
36,000
(Being interest due on outstanding 6,000 12% debentures)
Debenture Holders A/c
Dr.
36,000
To Bank A/c
36,000
(Being interest paid to the debenture holders)
2016
Mar 31
Debenture Interest A/c
Dr.
36,000
To Debenture Holders A/c
36,000
(Being interest due on outstanding 6,000 12% debentures)
Debenture Holders A/c
Dr.
36,000
To Bank A/c
36,000
(Being interest paid to the debenture holders)
2017
Mar 31
Debenture Interest A/c
Dr.
36,000
To Debenture Holders A/c
36,000
(Being interest due on outstanding 6,000 12% debentures)
12% Debentures A/c
Dr.
75,000
To Debenture Holders A/c
75,000
(Being amount due on redemption of first installment of 1,500 debentures)
Debenture Holders A/c
Dr.
1,11,000
To Bank A/c
1,11,000
(Being payment done to debenture holders including interest)
2018
Mar 31
Debenture Interest A/c
Dr.
27,000
To Debenture Holders A/c
27,000
(Being interest due on outstanding 4,500 12% debentures)
12% Debentures A/c
Dr.
75,000
To Debenture Holders A/c
75,000
(Being amount due on redemption of second installment of 1,500 debentures)
Debenture Holders A/c
Dr.
1,02,000
To Bank A/c
1,02,000
(Being payment done to debenture holders including interest)
2019
Mar 31
Debenture Interest A/c
Dr.
18,000
To Debenture Holders A/c
18,000
(Being interest due on outstanding 3,000 12% debentures)
12% Debentures A/c
Dr.
75,000
To Debenture Holders A/c
75,000
(Being amount due on redemption of third installment of 1,500 debentures)
Debenture Holders A/c
Dr.
93,000
To Bank A/c
93,000
(Being payment done to debenture holders including interest)
2020
Mar 31
Debenture Interest A/c
Dr.
9,000
To Debenture Holders A/c
9,000
(Being interest due on outstanding 1,500 12% debentures)
12% Debentures A/c
Dr.
75,000
To Debenture Holders A/c
75,000
(Being amount due on redemption of fourth/last installment of 1,500 debentures)
Debenture Holders A/c
Dr.
84,000
To Bank A/c
84,000
(Being payment done to debenture holders including interest)
(ii) Debentures are issued at a premium of 10% and redeemable at par.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2014
Apr 1
Bank A/c
Dr.
3,30,000
To Debenture Application and Allotment A/c
3,30,000
(Being application and allotment money received for 6,000 12% debentures each of ₹ 50 at par value and 10% premium)
Debenture Application and Allotment A/c
Dr.
3,30,000
To 12% Debentures A/c
3,00,000
To Securities Premium Reserve A/c
30,000
(Being application money transferred to the debentures account and the premium adjusted)
2015
Mar 31
Debenture Interest A/c
Dr.
36,000
To Debenture Holders A/c
36,000
(Being interest due on outstanding 6,000 12% debentures)
Debenture Holders A/c
Dr.
36,000
To Bank A/c
36,000
(Being interest paid to the debenture holders)
2016
Mar 31
Debenture Interest A/c
Dr.
36,000
To Debenture Holders A/c
36,000
(Being interest due on outstanding 6,000 12% debentures)
Debenture Holders A/c
Dr.
36,000
To Bank A/c
36,000
(Being interest paid to the debenture holders)
2017
Mar 31
Debenture Interest A/c
Dr.
36,000
To Debenture Holders A/c
36,000
(Being interest due on outstanding 6,000 12% debentures)
12% Debentures A/c
Dr.
75,000
To Debenture Holders A/c
75,000
(Being amount due on redemption of first installment of 1,500 debentures)
Debenture Holders A/c
Dr.
1,11,000
To Bank A/c
1,11,000
(Being payment done to debenture holders including interest)
2018
Mar 31
Debenture Interest A/c
Dr.
27,000
To Debenture Holders A/c
27,000
(Being interest due on outstanding 4,500 12% debentures)
12% Debentures A/c
Dr.
75,000
To Debenture Holders A/c
75,000
(Being amount due on redemption of second installment of 1,500 debentures)
Debenture Holders A/c
Dr.
1,02,000
To Bank A/c
1,02,000
(Being payment done to debenture holders including interest)
2019
Mar 31
Debenture Interest A/c
Dr.
18,000
To Debenture Holders A/c
18,000
(Being interest due on outstanding 3,000 12% debentures)
12% Debentures A/c
Dr.
75,000
To Debenture Holders A/c
75,000
(Being amount due on redemption of third installment of 1,500 debentures)
Debenture Holders A/c
Dr.
93,000
To Bank A/c
93,000
(Being payment done to debenture holders including interest)
2020
Mar 31
Debenture Interest A/c
Dr.
9,000
To Debenture Holders A/c
9,000
(Being interest due on outstanding 1,500 12% debentures)
12% Debentures A/c
Dr.
75,000
To Debenture Holders A/c
75,000
(Being amount due on redemption of fourth/last installment of 1,500 debentures)
Debenture Holders A/c
Dr.
84,000
To Bank A/c
84,000
(Being payment done to debenture holders including interest)
(iii) Debentures are issued at a discount of 10% and redeemable at par.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2014
Apr 1
Bank A/c
Dr.
2,70,000
To Debenture Application and Allotment A/c
2,70,000
(Being application and allotment money received for 6,000 12% debentures each of ₹ 50 at par value at 10% discount)
Debenture Application and Allotment A/c
Dr.
2,70,000
Discount on Issue of Debentures A/c
Dr.
30,000
To 12% Debentures A/c
3,00,000
(Being application money transferred to the debentures account and discount adjusted)
2015
Mar 31
Securities Premium Reserve/ Statement of Profit and Loss A/c
Dr.
30,000
To Discount on Issue of Debentures A/c
30,000
(Being discount on issue of debentures written-off)
Debenture Interest A/c
Dr.
36,000
To Debenture Holders A/c
36,000
(Being interest due on outstanding 6,000 12% debentures)
Debenture Holders A/c
Dr.
36,000
To Bank A/c
36,000
(Being interest paid to the debenture holders)
2016
Mar 31
Debenture Interest A/c
Dr.
36,000
To Debenture Holders A/c
36,000
(Being interest due on outstanding 6,000 12% debentures)
Debenture Holders A/c
Dr.
36,000
To Bank A/c
36,000
(Being interest paid to the debenture holders)
2017
Mar 31
Debenture Interest A/c
Dr.
36,000
To Debenture Holders A/c
36,000
(Being interest due on outstanding 6,000 12% debentures)
12% Debentures A/c
Dr.
75,000
To Debenture Holders A/c
75,000
(Being amount due on redemption of first installment of 1,500 debentures)
Debenture Holders A/c
Dr.
1,11,000
To Bank A/c
1,11,000
(Being payment done to debenture holders including interest)
2018
Mar 31
Debenture Interest A/c
Dr.
27,000
To Debenture Holders A/c
27,000
(Being interest due on outstanding 4,500 12% debentures)
12% Debentures A/c
Dr.
75,000
To Debenture Holders A/c
75,000
(Being amount due on redemption of second installment of 1,500 debentures)
Debenture Holders A/c
Dr.
1,02,000
To Bank A/c
1,02,000
(Being payment done to debenture holders including interest)
2019
Mar 31
Debenture Interest A/c
Dr.
18,000
To Debenture Holders A/c
18,000
(Being interest due on outstanding 3,000 12% debentures)
12% Debentures A/c
Dr.
75,000
To Debenture Holders A/c
75,000
(Being amount due on redemption of third installment of 1,500 debentures)
Debenture Holders A/c
Dr.
93,000
To Bank A/c
93,000
(Being payment done to debenture holders including interest)
2020
Mar 31
Debenture Interest A/c
Dr.
9,000
To Debenture Holders A/c
9,000
(Being interest due on outstanding 1,500 12% debentures)
12% Debentures A/c
Dr.
75,000
To Debenture Holders A/c
75,000
(Being amount due on redemption of fourth/last installment of 1,500 debentures)
Debenture Holders A/c
Dr.
84,000
To Bank A/c
84,000
(Being payment done to debenture holders including interest)
(iv) Debentures are issued at par and redeemable at a premium of 10%.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2014
Apr 1
Bank A/c
Dr.
3,00,000
To Debenture Application and Allotment A/c
3,00,000
(Being application and allotment money received for 6,000 12% debentures each of ₹ 50 at par value)
Debenture Application and Allotment A/c
Dr.
3,00,000
Loss on Issue of Debentures A/c
Dr.
30,000
To 12% Debentures A/c
3,00,000
To Premium on Redemption of Debentures A/c
30,000
(Being application money transferred to the debentures account and premium on redemption of debentures adjusted)
2015
Mar 31
Securities Premium Reserve/ Statement of Profit and Loss A/c
Dr.
30,000
To Loss on Issue of Debentures A/c
30,000
(Being loss on issue of debentures written-off)
Debenture Interest A/c
Dr.
36,000
To Debenture Holders A/c
36,000
(Being interest due on outstanding 6,000 12% debentures)
Debenture Holders A/c
Dr.
36,000
To Bank A/c
36,000
(Being interest paid to the debenture holders)
2016
Mar 31
Debenture Interest A/c
Dr.
36,000
To Debenture Holders A/c
36,000
(Being interest due on outstanding 6,000 12% debentures)
Debenture Holders A/c
Dr.
36,000
To Bank A/c
36,000
(Being interest paid to the debenture holders)
2017
Mar 31
Debenture Interest A/c
Dr.
36,000
To Debenture Holders A/c
36,000
(Being interest due on outstanding 6,000 12% debentures)
12% Debentures A/c
Dr.
75,000
Premium on Redemption of Debentures A/c
Dr.
7,500
To Debenture Holders A/c
82,500
(Being amount due on redemption of first installment of 1,500 debentures, including premium on redemption of debentures)
Debenture Holders A/c
Dr.
1,18,500
To Bank A/c
1,18,500
(Being payment done to debenture holders including interest)
2018
Mar 31
Debenture Interest A/c
Dr.
27,000
To Debenture Holders A/c
27,000
(Being interest due on outstanding 4,500 12% debentures)
12% Debentures A/c
Dr.
75,000
Premium on Redemption of Debentures A/c
Dr.
7,500
To Debenture Holders A/c
82,500
(Being amount due on redemption of second installment of 1,500 debentures, including premium on redemption of debentures)
Debenture Holders A/c
Dr.
1,09,500
To Bank A/c
1,09,500
(Being payment done to debenture holders including interest)
2019
Mar 31
Debenture Interest A/c
Dr.
18,000
To Debenture Holders A/c
18,000
(Being interest due on outstanding 3,000 12% debentures)
12% Debentures A/c
Dr.
75,000
Premium on Redemption of Debentures A/c
Dr.
7,500
To Debenture Holders A/c
82,500
(Being amount due on redemption of third installment of 1,500 debentures, including premium on redemption of debentures)
Debenture Holders A/c
Dr.
1,00,500
To Bank A/c
1,00,500
(Being payment done to debenture holders including interest)
2020
Mar 31
Debenture Interest A/c
Dr.
9,000
To Debenture Holders A/c
9,000
(Being interest due on outstanding 1,500 12% debentures)
12% Debentures A/c
Dr.
75,000
Premium on Redemption of Debentures A/c
Dr.
7,500
To Debenture Holders A/c
82,500
(Being amount due on redemption of fourth/last installment of 1,500 debentures, including premium on redemption of debentures)
Debenture Holders A/c
Dr.
91,500
To Bank A/c
91,500
(Being payment done to debenture holders including interest)
(v) Debentures are issued at a premium of 10% and redeemable at a premium of 10%.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2014
Apr 1
Bank A/c
Dr.
3,30,000
To Debenture Application and Allotment A/c
3,30,000
(Being application and allotment money received for 6,000 12% debentures each of ₹ 50 at par value and 10% premium)
Debenture Application and Allotment A/c
Dr.
3,30,000
Loss on Issue of Debentures A/c
Dr.
30,000
To 12% Debentures A/c
3,00,000
To Securities Premium Reserve A/c
30,000
To Premium on Redemption of Debentures A/c
30,000
(Being application money transferred to the debentures account, premium and premium on redemption of debentures adjusted)
2015
Mar 31
Securities Premium Reserve A/c
Dr.
30,000
To Loss on Issue of Debentures A/c
30,000
(Being loss on issue of debentures written-off)
Debenture Interest A/c
Dr.
36,000
To Debenture Holders A/c
36,000
(Being interest due on outstanding 6,000 12% debentures)
Debenture Holders A/c
Dr.
36,000
To Bank A/c
36,000
(Being interest paid to the debenture holders)
2016
Mar 31
Debenture Interest A/c
Dr.
36,000
To Debenture Holders A/c
36,000
(Being interest due on outstanding 6,000 12% debentures)
Debenture Holders A/c
Dr.
36,000
To Bank A/c
36,000
(Being interest paid to the debenture holders)
2017
Mar 31
Debenture Interest A/c
Dr.
36,000
To Debenture Holders A/c
36,000
(Being interest due on outstanding 6,000 12% debentures)
12% Debentures A/c
Dr.
75,000
Premium on Redemption of Debentures A/c
Dr.
7,500
To Debenture Holders A/c
82,500
(Being amount due on redemption of first installment of 1,500 debentures, including premium on redemption of debentures)
Debenture Holders A/c
Dr.
1,18,500
To Bank A/c
1,18,500
(Being payment done to debenture holders including interest)
2018
Mar 31
Debenture Interest A/c
Dr.
27,000
To Debenture Holders A/c
27,000
(Being interest due on outstanding 4,500 12% debentures)
12% Debentures A/c
Dr.
75,000
Premium on Redemption of Debentures A/c
Dr.
7,500
To Debenture Holders A/c
82,500
(Being amount due on redemption of second installment of 1,500 debentures, including premium on redemption of debentures)
Debenture Holders A/c
Dr.
1,09,500
To Bank A/c
1,09,500
(Being payment done to debenture holders including interest)
2019
Mar 31
Debenture Interest A/c
Dr.
18,000
To Debenture Holders A/c
18,000
(Being interest due on outstanding 3,000 12% debentures)
12% Debentures A/c
Dr.
75,000
Premium on Redemption of Debentures A/c
Dr.
7,500
To Debenture Holders A/c
82,500
(Being amount due on redemption of third installment of 1,500 debentures, including premium on redemption of debentures)
Debenture Holders A/c
Dr.
1,00,500
To Bank A/c
1,00,500
(Being payment done to debenture holders including interest)
2020
Mar 31
Debenture Interest A/c
Dr.
9,000
To Debenture Holders A/c
9,000
(Being interest due on outstanding 1,500 12% debentures)
12% Debentures A/c
Dr.
75,000
Premium on Redemption of Debentures A/c
Dr.
7,500
To Debenture Holders A/c
82,500
(Being amount due on redemption of fourth/last installment of 1,500 debentures, including premium on redemption of debentures)
Debenture Holders A/c
Dr.
91,500
To Bank A/c
91,500
(Being payment done to debenture holders including interest)
(vi) Debentures are issued at a discount of 10% and redeemable at a premium of 10%.
Journal Entries
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2014
Apr 1
Bank A/c
Dr.
2,70,000
To Debenture Application and Allotment A/c
2,70,000
(Being application and allotment money received for 6,000 12% debentures each of ₹ 50 at par value and 10% discount)
Debenture Application and Allotment A/c
Dr.
2,70,000
Loss on Issue of Debentures A/c
Dr.
60,000
To 12% Debentures A/c
3,00,000
To Premium on Redemption of Debentures A/c
30,000
(Being application money transferred to the debentures account, discount on issue and premium on redemption of debentures adjusted)
2015
Mar 31
Securities Premium Reserve/ Statement of Profit and Loss A/c
Dr.
60,000
To Loss on Issue of Debentures A/c
60,000
(Being loss on issue of debentures written-off)
Debenture Interest A/c
Dr.
36,000
To Debenture Holders A/c
36,000
(Being interest due on outstanding 6,000 12% debentures)
Debenture Holders A/c
Dr.
36,000
To Bank A/c
36,000
(Being interest paid to the debenture holders)
2016
Mar 31
Debenture Interest A/c
Dr.
36,000
To Debenture Holders A/c
36,000
(Being interest due on outstanding 6,000 12% debentures)
Debenture Holders A/c
Dr.
36,000
To Bank A/c
36,000
(Being interest paid to the debenture holders)
2017
Mar 31
Debenture Interest A/c
Dr.
36,000
To Debenture Holders A/c
36,000
(Being interest due on outstanding 6,000 12% debentures)
12% Debentures A/c
Dr.
75,000
Premium on Redemption Debentures A/c
Dr.
7,500
To Debenture Holders A/c
82,500
(Being amount due on redemption of first installment of 1,500 debentures, including premium on redemption of debentures)
Debenture Holders A/c
Dr.
1,18,500
To Bank A/c
1,18,500
(Being payment done to debenture holders including interest)
2018
Mar 31
Debenture Interest A/c
Dr.
27,000
To Debenture Holders A/c
27,000
(Being interest due on outstanding 4,500 12% debentures)
12% Debentures A/c
Dr.
75,000
Premium on Redemption of Debentures A/c
Dr.
7,500
To Debenture Holders A/c
82,500
(Being amount due on redemption of second installment of 1,500 debentures, including premium on redemption of debentures)
Debenture Holders A/c
Dr.
1,09,500
To Bank A/c
1,09,500
(Being payment done to debenture holders including interest)
2019
Mar 31
Debenture Interest A/c
Dr.
18,000
To Debenture Holders A/c
18,000
(Being interest due on outstanding 3,000 12% debentures)
12% Debentures A/c
Dr.
75,000
Premium on Redemption of Debentures Debentures A/c
Dr.
7,500
To Debenture Holders A/c
82,500
(Being amount due on redemption of third installment of 1,500 debentures, including premium on redemption of debentures)
Debenture Holders A/c
Dr.
1,00,500
To Bank A/c
1,00,500
(Being payment done to debenture holders including interest)
2020
Mar 31
Debenture Interest A/c
Dr.
9,000
To Debenture Holders A/c
9,000
(Being interest due on outstanding 1,500 12% debentures)
12% Debentures A/c
Dr.
75,000
Premium on Redemption of Debentures A/c
Dr.
7,500
To Debenture Holders A/c
82,500
(Being amount due on redemption of fourth/last installment of 1,500 debentures, including premium on redemption of debentures)
Debenture Holders A/c
Dr.
91,500
To Bank A/c
91,500
(Being payment done to debenture holders including interest)