Class 12-commerce T S GREWAL Solutions Accountancy Chapter 9: Company Accounts - Issue of Debentures

9.51

9.52

9.53

9.54

9.55

9.56

9.57

Company Accounts - Issue of Debentures Exercise 9.51

Solution Ex. 1

In the books of Vishwas Ltd. Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		50,000
	------To 9% Debenture Application A/c				50,000
	(Being application money received for 2,000 debentures at Rs.25 each)

	9% Debenture Application A/c	Dr.		50,000
	------To9% Debenture A/c				50,000
	(Being debenture application money transferred to 9% Debentures A/c)

	9% Debenture Allotment A/c	Dr.		50,000
	------To 9% Debenture A/c				50,000
	(Being debenture allotment money due on 2,000 Debentures at Rs.25 each)

	Bank A/c	Dr.		50,000
	------To 9% Debenture Allotment A/c				50,000
	(Being debenture allotment money received)

	9% Debenture First and Final Call A/c	Dr.		1,00,000
	------To9% Debenture A/c				1,00,000
	(Being debenture first and final call money due on 2,000 debentures at Rs.50 each)

	Bank A/c	Dr.		1,00,000
	------To 9% Debenture First and Final Call A/c				1,00,000
	(Being debenture first and final call received)

Solution Ex. 2

In the books of A Ltd. Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		48,000
	------To 9% Debenture Application A/c				48,000
	(Being application money received for 2,400 debentures at Rs.20 each)

	9% Debenture Application A/c	Dr.		48,000
	------To9% Debenture A/c				40,000
	------To 9% Debenture Allotment A/c				4,000
	------To Bank A/c				4,000
	(Being debenture application money transferred to 9% debentures A/c for 2,000 debenture, adjusted to debenture allotment account for 200 debentures and money refunded for 200 debentures)

	9% Debenture Allotment A/c	Dr.		40,000
	------To 9% Debenture A/c				40,000
	(Being debenture allotment money due on 2,000 debentures at Rs.20 each)

	Bank A/c	Dr.		36,000
	------To 9% Debenture Allotment A/c				36,000
	(Being debenture allotment money received)

	Debenture First Call A/c	Dr.		60,000
	------To 9% Debenture A/c				60,000
	(Being debenture first call money due on 2,000 9% debentures at Rs.30 each)

	Bank A/c	Dr.		60,000
	------To Debenture First Call A/c				60,000
	(Being debenture first call received)

	Debenture Final Call A/c	Dr.		60,000
	------To 9% Debenture A/c				60,000
	(Being debenture Final call money due on 2,000 9% debentures at Rs.30 each)

	Bank A/c	Dr.		60,000
	------To Debenture Final Call A/c				60,000
	(Being debenture first call received on 2,000 9% debenture at Rs.30 each)

Solution Ex. 3

Journal
Date	Particulars		L.F.	Dr. Rs.	Cr. Rs.
	Bank A/c (60,000 × 100)	Dr.		60,00,000
	--------- To Debenture Application and Allotment A/c				60,00,000
	(Being received application money on 60,000 Debenture)

	Debenture Application and Allotment A/c	Dr.		60,00,000
	-------- To 10% Debenture A/c (40,000 × 100)				40,00,000
	-------- To Bank A/c				20,00,000
	(Being application money transferred to Debentures A/c)

Company Accounts - Issue of Debentures Exercise 9.52

Solution Ex. 4

Books of Narain Laxmi Ltd. Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		13,50,000
	------To 9% Debenture Application and Allotment A/c				13,50,000
	(Being application money received on 10,000 12% debentures of Rs.100 each at a premium of Rs.35)

	Debenture Application and Allotment A/c	Dr.		13,50,000
	------To12% Debenture A/c				7,50,000
	------To Securities Premium Reserve A/c				2,62,500
	------To Bank A/c				3,37,500
	(Being 7,500; 12% debenture of Rs.100 each issued at a premium of Rs.35 and excess money refunded)

Solution Ex. 5

Books of Raj Ltd. Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		50,000
	------To 8% Debenture Application A/c				50,000
	(Being application money received for 5,000 debentures at Rs.10 each)

	8% Debenture Application A/c	Dr.		50,000
	------To 8% Debenture A/c				50,000
	(Being debenture application money transferred to 8% debentures A/c)

	8% Debenture Allotment A/c	Dr.		1,00,000
	------To 8% Debenture A/c				75,000
	------To Securities Premium A/c				25,000
	(Being debenture allotment money due on 5,000 8% debentures at Rs.20 including premium of Rs.5)

	Bank A/c	Dr.		1,00,000
	------To 8% Debenture Allotment A/c				1,00,000
	(Being debenture allotment money received)

	8% Debenture First and Final Call A/c	Dr.		3,75,000
	------To 8% Debenture A/c				3,75,000
	(Being debenture first and final call money due on 5,000 debentures at Rs.75 each)

	Bank A/c	Dr.		3,75,000
	------To 8% Debenture First and Final Call A/c				3,75,000
	(Being debenture first and final call received)

Solution Ex.6

Face value Rs.100

Premium 10%= (100 × 10%) Rs.10

Issue Price = Rs.110

Payable as:

On Application (25%) (10+15)	Rs.25 including premium of Rs.10
On Allotment (85%)	Rs.85 per

Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Debenture Application A/c	Dr.		2,50,000
	------To Debenture A/c				1,50,000
	------To Securities Premium A/c				1,00,000
	(Being debenture application money received for 10,000 debentures at Rs.25 including premium of Rs.10 each transferred to debenture account)

	Debenture Allotment A/c	Dr.		8,50,000
	------To Debenture A/c				8,50,000
	(Being debenture allotment due on 10,000 Debentures at Rs.85 each)

Cash Book
Dr.					Cr.
Date	Particulars	Rs.	Date	Particulars	Rs.
	To Debenture Application A/c	2,50,000		By Balance c/d	11,00,000
	To Debenture Allotment A/c	8,50,000
		11,00,000			11,00,000

Solution Ex. 7

Journal
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		14,00,000
	------To Debenture Application A/c				14,00,000
	(Being application money received for 7,000 debentures Rs.200 each)

	Debenture Application A/c	Dr.		14,00,000
	------To10% Debenture A/c				14,00,000
	(Being transferred of application money to Debentures A/c)

	Debenture Allotment A/c	Dr.		24,50,000
	Loss on issue of Debentures A/c	Dr.		3,50,000
	------To10% Debenture A/c				21,00,000
	------To Securities Premium Reserve A/c				3,50,000
	------To premium on Redemption of Debentures A/c				3,50,000
	(Being allotment due on 7,000 Debentures Rs.300 each at a premium of Rs.50 per debentures and redeemable at premium of 10%)

	Bank A/c	Dr.		24,50,000
	------To Debenture Allotment A/c				24,50,000
	(Being allotment money received)

Solution Ex. 8

Books of Vijay Laxmi Limited Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		22,95,000
	------To Debenture Application and Allotment A/c				22,95,000
	(Being application money received on 13,500 12% debenture)

	Debenture Application and Allotment A/c	Dr.		22,95,000
	------To12% Debenture A/c				10,00,000
	------To Securities Premium Reserve A/c				7,00,000
	------To Bank A/c				5,95,000
	(Being 10,000; 12% debenture issued at a premium of Rs.70 and excess money refunded)

Solution Ex. 9

Journal
Date	Particulars		L.F.	Dr. Rs.	Cr. Rs.
	Bank A/c	Dr.		2,00,000
	-------- To debenture Application A/c				2,00,000
	(Being application money received)

	Debenture Application A/c	Dr.		2,00,000
	------- To 9% Debenture A/c				1,50,000
	------- To Security Premium Reserve A/c				50,000
	(Being application money adjusted)

	Debenture Allotment A/c	Dr.		2,25,000
	-------- To 9% Debenture A/c				1,50,000
	-------- To Security Premium Reserve A/c				75,000
	(Being allotment money due)

	Bank A/c	Dr.		2,25,000
	-------- To Debenture Allotment A/c				2,25,000
	(Being allotment money received)

	Debenture First and Final call A/c	Dr.		2,75,000
	-------- To 9% Debenture A/c				2,00,000
	-------- To Security Premium Reserve A/c				75,000
	(Being first call money due)

	Bank A/c	Dr.		2,75,000
	--------- To Debenture Final and Final call A/c				2,75,000
	(First Call money Received)

Solution Ex. 10

Face value Rs.100

Discount 5% =(Rs.100 × 5%)Rs.5

Issue Price = Rs.95

Payable as:

On Application (25%)	Rs.25 per
On Allotment (85%) (25 - 5 )per	Rs.20
On First and Final Call (50%)	Rs.50 per

Journal
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		3,00,000
	------To 8% Debenture Application A/c				3,00,000
	(Being application money received for 12,000 8% debentures at Rs.25 each)

	8% Debenture Application A/c	Dr.		3,00,000
	------To 8% Debenture A/c				3,00,000
	(Being debenture application money transferred to 8% debentures A/c)

	8% Debenture Allotment A/c	Dr.		2,40,000
	Discounted on Issue of Debentures A/c	Dr.		60,000
	------To 8% Debenture A/c				3,00,000
	(Being allotment money due on 12,000 8% debentures at Rs.20 each at discount of Rs.5)

	Bank A/c	Dr.		2,40,000
	------To 8% Debenture Allotment A/c				2,40,000
	(Being allotment money received)

	8% Debenture First and Final Call A/c	Dr.		6,00,000
	------To8% Debenture A/c				6,00,000
	(Being first and final call money due on 12,000 8% debentures at Rs.50 each)

	Bank A/c	Dr.		6,00,000
	------To 8% Debenture First and Final Call A/c				6,00,000
	(Being first and final call received)

Solution Ex.11

Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		25,00,000
	------To Debenture Application A/c				25,00,000
	(Being application money received for 5,000 debentures Rs.500 each )

	Debenture Application A/c	Dr.		25,00,000
	------To10% Debenture A/c				25,00,000
	(Being transferred application money to debentures A/c)

	Debenture Allotment A/c	Dr.		20,00,000
	Discount on issue of Debentures A/c	Dr.		5,00,000
	Loss on issue of Debentures A/c	Dr.		2,50,000
	------To 10% Debenture A/c				25,00,000
	------To Premium on Redemption of Debentures A/c				2,50,000
	(Being allotment due on 5,000 debentures Rs.500 each at a discounted of Rs.100 per debentures and redeemable at premium of 5%)

	Bank A/c	Dr.		20,00,000
	------To Debenture Allotment A/c				20,00,000
	(Being allotment money received)

Solution Ex. 12

Journal
Date	Particulars		L.F.	Dr. Rs.	Cr. Rs.

	Incorporation Cost A/c	Dr.		2,00,000
	-------- To 6% Debentures A/c				2,00,000
	(Being 2000 debenture Rs.100 each issued to promoters)

Company Accounts - Issue of Debentures Exercise 9.53

Solution Ex. 13

Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Building A/c	Dr.		9,00,000
	------To Vendor A/c				9,00,000
	(Being building purchased)

	Vendor A/c	Dr.		9,00,000
	Discount on Issue of Debentures A/c	Dr.		1,00,000
	------To 10% Debentures A/c				10,00,000
	(Being issued 10,000, 10% debentures at 10% discount)

Working Note:

Solution Ex. 14

In the books of Wye Ltd. Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Sundry Assets A/c	Dr.		2,00,000
	------To vendor A/c				2,00,000
	(Being business purchased)

	Vendor A/c	Dr.		65,000
	------To Bank A/c				65,000
	(Being amount paid to vendor in cash)

	Vendor A/c	Dr.		1,35,000
	Discount on Issue of Debentures A/c	Dr.		15,000
	------To 9% Debenture A/c				1,50,000
	(Being issued 1,500 debentures at 10% discount)

Working Note:

Solution Ex. 15

In the books of Newton Ltd. Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Machinery A/c	Dr.		5,76,000
	------To B's A/c				5,76,000
	(Being machinery purchased from B)

	B's A/c	Dr.		5,76,000
	Discount on Issue of Debentures A/c	Dr.		24,000
	------To 9% Debenture A/c				6,00,000
	(Being issued 6,000 debentures at 4% discount)

Working Note:

Solution Ex. 16

(i)

In the books of Reliance Ltd. Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Machinery A/c	Dr.		1,35,000
	------To Vendor A/c				1,35,000
	(Being machinery purchased)

	Vendor A/c	Dr.		1,35,000
	------To 9% Debenture A/c				1,35,000
	(Being issued 1,350 debentures at par)

Working Note:

(ii)

In the books of Reliance Ltd. Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Machinery A/c	Dr.		1,35,000
	------To Vendor A/c				1,35,000
	(Being machinery purchased)

	Vendor A/c	Dr.		1,35,000
	Discount on Issue of Debentures A/c	Dr.		15,000
	------To 9% Debenture A/c				1,50,000
	(Being issued 1,500 debentures at 10% discount)

Working Note:

Solution Ex. 17

Books of Deepak Ltd. Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Furniture A/c	Dr.		2,20,000
	------To Furniture Mart A/c				2,20,000
	(Being furniture purchased from furniture mart )

	Furniture Mart A/c	Dr.		1,10,000
	------To Bills Payable A/c				1,10,000
	(Being bill accepted from furniture mart against 50% payment)

	Furniture Mart A/c	Dr.		1,10,000
	------To 9% Debenture A/c				1,00,000
	------To Securities Premium A/c				10,000
	(Being issued 1,000 9% debentures of Rs.100 each at a premium of 10% furniture mart)

Working Note:

Solution Ex. 18

Journal
Sr. No.	Particulars		L.F.	Dr. Rs.	Cr. Rs.
	Assets A/c	Dr.		6,60,000
	Goodwill A/c (Balancing figure)	Dr.		20,000
	-------- To Liablities A/c				80,000
	-------- To Star Ltd.				6,00,000
	(Being purchase of business of Star Ltd.)

	Star Ltd.	Dr.		60,000
	-------- To Cash A/c				60,000
	(Being payment made in cash)

(a)	Star Ltd.	Dr.		5,40,000
	---------- To 12 % Debenture A/c				5,40,000
	(Being purchase consideration discharged by issue of 12% Debentures)

(b)	Star Ltd.	Dr.		5,40,000
	-------- To 12% Debentures A/c				4,50,000
	-------- To Securities Premium Reserve A/c				90,000
	(Being purchase consideration discharged by issue of 12 % Debentures)

(c)	Star Ltd.	Dr.		5,40,000
	Discount on Issue of Debentures A/c	Dr.		60,000
	-------- To 12% Debenture A/c				6,00,000
	(Being purchase consideration discharged by issue of 12% Debentures)

Working Notes:

Solution Ex. 19

Journal
Sr. No.	Particulars		L.F.	Dr. Rs.	Cr. Rs.
	Assets A/c	Dr.		6,60,000
	Goodwill A/c (Balancing Figure)	Dr.		20,000	80,000
	-------- Ti Liablities A/c				6,00,000
	-------- To Moon Ltd.
	(Being purchase of business took over)

(a)	Moon Ltd.	Dr.		6,00,000
	-------- To Cash A/c				60,000
	-------- To 12 % Debenture A/c				5,40,000
	(Being purchase consideration discharged)

(b)	Moon Ltd.	Dr.		6,00,000
	-------- To Cash A/c				60,000
	-------- To 12% Debentures A/c				4,50,000
	-------- To Securities Premium Reserve A/c				90,000
	(Purchase consideration discharged)

Company Accounts - Issue of Debentures Exercise 9.54

Solution Ex. 20

Books of Romi Ltd. Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Assets A/c	Dr.		20,00,000
	------To Creditors A/c				2,00,000
	------To Kapil Enterprises A/c				18,00,000
	(Being assets purchased and creditors took over from Kapil enterprises )

	Kapil Enterprises A/c	Dr.		18,00,000
	------To 8%Debenture A/c				14,40,000
	------To Securities Premium A/c				3,60,000
	(Being issued 14,400 8% debentures of Rs.100 each at a premium of 25% to Kapil enterprises)

Working Note:

Solution Ex. 21

Books of Romi Ltd. Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Assets A/c	Dr.		20,00,000
	------To Creditors A/c				2,00,000
	------To Kapil Enterprises A/c				18,00,000
	(Being assets purchased and Creditors took over from Kapil Enterprises )

	Kapil Enterprises A/c	Dr.		18,00,000
	Discount on Issue of Debentures A/c	Dr.		2,00,000
	------To 8%Debenture A/c				20,00,000
	(Being issued 20,00 8% Debentures of Rs.100 each at discount of 10% to Kapil Enterprises)

Working Note:

Solution Ex. 22

Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Assets A/c	Dr.		4,00,000
	Goodwill A/c	Dr.		30,000
	------To Liabilities A/c				50,000
	------To Mohan Bros. A/c				3,80,000
	(Being business purchased of Mohan Bros.)

(a) When Debentures are issued at par

Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Mohan Bros A/c (WN 1)	Dr.		3,80,000
	------To Debenture A/c				3,80,000
	(Being issued 3,800 debenture at par)

(b)When Debentures are issued discount at 10%

Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Mohan Bros. A/c (WN 2)	Dr.		3,80,000
	Discount on issue of Debenture A/c	Dr.		42,220
	------To Debenture A/c				4,22,200
	------To Bank A/c				20
	(Being issued 4,222 debentures of Rs.100 each at 10% discount to Mohan Bros. and fraction of debentures is paid in cash)

(c) When Debentures are issued premium at 10%

Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Mohan Bros. A/c (WN 3)	Dr.		3,80,000
	------To Debenture A/c				3,45,400
	------To Securities Premium A/c				34,540
	------To Bank A/c				60
	(Being issued 3,454 debentures of Rs.100 each at 10% premium to mohan bros. and fraction of debentures is paid in cash)

Working Notes:

(1)

(2)

(3)

Solution Ex. 23

In the books of R Ltd. Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Assets A/c	Dr.		5,00,000
	------To Sundry Liabilities A/c				2,00,000
	------To S Ltd. A/c				2,80,000
	------To Capital Reserve A/c				20,000
	(Being assets purchased and liabilities took over from S Ltd.)

	S Ltd. A/c	Dr.		2,80,000
	------To 9% Debenture A/c				2,80,00
	(Being issued 2,800 9% debenture of Rs.10 each)

Working Note:

Solution Ex. 24

Books of Green Ltd. Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Sundry Assets A/c	Dr.		40,00,000
	------To Sundry Liabilities A/c				7,00,000
	------To Strong Ltd. A/c				32,40,000
	------To Capital Reserve A/c				60,000
	(Being business acquired)

	Strong Ltd. A/c	Dr.		32,40,000
	Discount on Issue of Debentures A/c	Dr.		3,60,000
	------To 10% Debenture A/c				36,00,000
	(Being 36,000 10% Debentures issued)

Working Note:

Solution Ex. 25

Books of Wellbeing Ltd. Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Sundry Assets A/c	Dr.		9,80,000
	------To Sundry Liabilities A/c				40,000
	------To HDR Ltd. A/c				9,00,000
	------To Capital Reserve A/c				40,000
	(Being business acquired)

	HDR Ltd. A/c	Dr.		9,00,000
	------To 9% Debenture A/c				7,50,000
	------To Securities Premium Reserve A/c				1,50,000
	(Being 7,500 10% Debentures issued)

Working Note:

Solution Ex. 26

In the books of Grown Ltd. Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Incorporation Expenses A/c	Dr.		5,00,000
	------To Promoter's A/c				5,00,000
	(Being cost of company incorporation being paid to promoters)

	Promoter's A/c	Dr.		5,00,000
	------To 10% Debentures A/c				5,00,000
	(Being 500, 10% debenture allotted to promoters)

	Underwriting Commission A/c	Dr.		1,00,000
	------To Underwriters' A/c				1,00,000
	(Being the underwriting commission due)

	Underwriters' A/c	Dr.		1,00,000
	------To 10% Debentures A/c				1,00,000
	(Being 100, 10% Debentures issued to underwriters)

	Statement of Profit and Loss A/c			6,00,000
	------To Incorporation Expenses A/c				5,00,000
	------To Underwriting Commission A/c				1,00,000
	(Being incorporation expenses and underwriting expenses written off)

Company Accounts - Issue of Debentures Exercise 9.55

Solution Ex. 27

In the books of Sangam Wollens Ltd. Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Machinery A/c	Dr.		5,00,000
	------To Vendor's A/c				5,00,000
	(Being the purchase of machinery)

	Vendor's A/c	Dr.		5,00,000
	------To Equity Share Capital A/c				4,00,000
	------To 9% Debentures A/c				1,00,000
	(Being issue of 40,000 equity shares and 1,000, 9% Debentures to vendor in consideration of his dues)

Solution Ex. 28

Balance Sheet of Best Barcode Ltd.
Particulars				Note No.	Rs.
I. Equity and Liabilities
	1. Shareholder's Funds
	2. Non-Current Liabilities
			a. Long-Term Borrowings	1	5,00,000
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	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 Rs.	Credit Rs.
	Bank A/c	Dr.		5,00,000
	------To Loan A/c				5,00,000
	(Being loan taken against issuing 9% Debentures as collateral Security )

Alternative Method:

Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		5,00,000
	------To Loan A/c				5,00,000
	(Being 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
	(Being issued 9% Debentures of Rs.6,00,0000 as collateral security)

Balance Sheet of Best Barcode Ltd.
Particulars				Note No.	Rs.
I. Equity and Liabilities
	1. Shareholder's Funds
	2. Non-Current Liabilities
			a. Long-Term Borrowings	1	5,00,000
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		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% Debenture(Issued as Collateral Security to Bank against loan)	6,00,000
	Less: Debenture Suspense Account	(6,00,000)	NIL
			5,00,000

2	Cash and Cash Equivalents
	Cash at Bank		5,00,000

Solution Ex. 29

Debentures issued as Collateral Security shown separately

Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		4,00,000
	------To Loan from Bandhan Bank Ltd.				4,00,000
	(Being loan taken against issuing 8% Debentures as collateral Security )

	Debenture Suspense A/c	Dr.		4,00,000
	------To 8% Debentures A/c				4,00,000
	(Being issued 8% Debentures as collateral security)

Company's Balance Sheet

Balance Sheet
Particulars			Note No.	Rs.
I. Equity and Liabilities
	1. Shareholders' Funds
	2. Non-Current Liabilities
		Long-Term Borrowings	1	4,00,000
Total				4,00,000
II. Assets
	1. Non-Current Assets
	2. Current Assets
		Cash and Cash Equivalents	2	4,00,000
Total				4,00,000

NOTES TO ACCOUNTS

Note No.	Particulars		Rs.
1	Long-Term Borrowings
	Secured:
	Loan form Bandhan Bank (Secured by issue of Debentures of Rs.4,00,000)		4,00,000
	8% Debenture(Issued as Collateral Security to Bank against loan)	4,00,000
	Less: Debenture Suspense Account	(4,00,000)	NIL
			4,00,000

2	Cash and Cash Equivalents
	Cash at Bank		4,00,000

Alternative Method

Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		4,00,000
	------To Loan Form Bandhan Bank Ltd A/c				4,00,000
	(Being loan taken from Bandhan Bank secured by issuing Debentures as collateral Security )

Balance Sheet
Particulars			Note No.	Rs.
I. Equity and Liabilities
	1. Shareholders' Funds
	2. Non-Current Liabilities
		Long-Term Borrowings	1	4,00,000
Total				4,00,000
II. Assets
	1. Non-Current Assets
	2. Current Assets
		Cash and Cash Equivalents	2	4,00,000
Total				4,00,000

NOTES TO ACCOUNTS

Note No.	Particulars	Rs.
1	Long-Term Borrowings
	Secured:
	Loan form Bandhan Bank (Secured by issue of 8% Debenture of Rs.4,00,000 as Collateral Security)	4,00,000

2	Cash and Cash Equivalents
	Cash at Bank	4,00,000

Solution Ex. 30

X Ltd. Balance Sheet
Particulars			Note No.	Rs.
I. Equity and Liabilities
	1. Shareholders' Funds
	2. Non-Current Liabilities
		Long-Term Borrowings	1	3,00,000
Total				3,00,000
II. Assets
	1. Non-Current Assets
	2. Current Assets
		Cash and Cash Equivalents	2	3,00,000
Total				3,00,000

Notes To Accounts

Note No.	Particulars		Rs.
1	Long-Term Borrowings
	Secured:
	Loan Form IDBI (Secured by issue of Debentures of Rs.4,00,000)		3,00,000
	9% Debenture(Issued as Collateral Security to Bank against loan)	4,00,000
	Less: Debenture Suspense Account	4,00,000	NIL
			3,00,000

2	Cash and Cash Equivalents
	Cash at Bank		3,00,000

Solution Ex. 31

(i) When Company decides not to record the issue of 10% Debentures as Collateral Security

Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		5,00,000
	------To Bank Loan A/c				5,00,000
	(Being loan taken from SBI @ 10% interest, against collateral security of 7,500 10% Debentures of 100 each)

Balance Sheet
Particulars			Note No.	Rs.
I. Equity and Liabilities
	1. Shareholders' Funds
	2. Non-Current Liabilities
		Long-Term Borrowings	1	5,00,000
Total				5,00,000
II. Assets
	1. Non-Current Assets
	2. Current Assets
		Cash and Cash Equivalents	2	5,00,000
Total				5,00,000

NOTES TO ACCOUNTS

Note No.	Particulars	Rs.
1	Long-Term Borrowings
	Secured:
	Loan form SBI (Secured by issue of 10% Debenture of Rs.7,50,000 as Collateral Security)	5,00,000

2	Cash and Cash Equivalents
	Cash at Bank	5,00,000

(ii) When Company decides to record the issue of 10% Debentures as Collateral Security

Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		5,00,000
	------To Bank Loan A/c				5,00,000
	(Being loan taken from SBI @ 10% interest, against collateral security of 7,500 10% Debentures of 100 each)

	Debenture Suspense A/c	Dr.		7,50,000
	------To 10% Debentures A/c				7,50,000
	(Being issued 10% Debentures as collateral security)

Company's Balance Sheet

Balance Sheet
Particulars			Note No.	Rs.
I. Equity and Liabilities
	1. Shareholders' Funds
	2. Non-Current Liabilities
		Long-Term Borrowings	1	5,00,000
Total				5,00,000
II. Assets
	1. Non-Current Assets
	2. Current Assets
		Cash and Cash Equivalents	2	5,00,000
Total				5,00,000

NOTES TO ACCOUNTS

Note No.	Particulars		Rs.
1	Long-Term Borrowings
	Secured:
	Loan form SBI (Secured by issue of Debentures of Rs.7,50,000)		5,00,000
	10% Debenture(Issued as Collateral Security to Bank against loan)	7,50,000
	Less: Debenture Suspense Account	(7,50,000)	NIL
			5,00,000

2	Cash and Cash Equivalents
	Cash at Bank		5,00,000

Solution Ex. 32

Journal Entries
Sr. No.	Particulars		L.F.	Debit Rs.	Credit Rs.
a.	Bank A/c	Dr.		95
	------To Debenture Application A/c				95
	(Being debentures application money received )

	Debenture Application A/c	Dr.		95
	Discount On Issue of Debentures A/c	Dr.		5
	------To Debenture A/c				100
	(Being 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
	(Being 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 Debenture A/c				100
	------To premium on Redemption A/c				5
	(Being 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
	(Being debenture application received)

	Debenture Application A/c	Dr.		100
	Loss On Issue of Debentures A/c	Dr.		5
	------To Debenture A/c				100
	------To premium on Redemption A/c				5
	(Being debenture of Rs.100 each issued at par with the term repayable at Rs.105)

Solution Ex. 33

Journal Entries
Sr. No.	Particulars		L.F.	Debit Rs.	Credit Rs.
a.	Bank A/c	Dr.		42,000
	------To 12%Debenture Application A/c				42,000
	(Being debentures application money received )

	12%Debenture Application A/c	Dr.		42,000
	------To 12%Debenture A/c				40,000
	------To Securities Premium A/c				2,000
	(Being debenture application money transferred to 12% Debentures account and securities premium account)

b.	Bank A/c	Dr.		36,000
	------To 12% Debenture Application A/c				36,000
	(Being debenture application money received)

	12% Debenture Application A/c	Dr.		36,000
	Discount On Issue of Debentures A/c	Dr.		4,000
	------To 12% Debenture A/c				40,000
	(Being debenture of Rs.40,000 issued at 10% discount)

c.	Bank A/c	Dr.		40,000
	------To 12% Debenture Application A/c				40,000
	(Being debenture application money received)

	12%Debenture Application A/c	Dr.		40,000
	Loss On Issue of Debentures A/c	Dr.		4,000
	------To 12% Debenture A/c				40,000
	------To Premium on Redemption A/c				4,000
	(Being debenture of Rs.40,000 issued at par with the term repayable at 10% premium)

d.	Bank A/c	Dr.		38,000
	------To 12%Debenture Application A/c				38,000
	(Being debenture application money received)

	12% Debenture Application A/c	Dr.		38,000
	Discount on Issue of Debentures A/c	Dr.		2,000
	Loss On Issue of Debentures A/c	Dr.		2,000
	------To 12%Debenture A/c				40,000
	------To Premium on Redemption A/c				2,000
	(Being debenture of Rs.40,000 issued at 5% discount with the term repayable at 5% premium)

e.	Bank A/c	Dr.		44,000
	------To 12%Debenture Application A/c				44,000
	(Being debenture application money received)

	12% Debenture Application A/c	Dr.		44,000
	Loss On Issue of Debentures A/c	Dr.		4,000
	------To 12%Debenture A/c				40,000
	------To Securities Premium A/c				4,000
	------To Premium on Redemption A/c				4,000
	(Being debenture of Rs.40,000 issued and Payable with at 10% premium )

Solution Ex. 34

In the books of Footfall Ltd. Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		9,00,000
	------To Debenture Application A/c				9,00,000
	(Being debentures application money received for 10,000 debentures at Rs.90 each)

	Debenture Application A/c	Dr.		9,00,000
	Discount on Issue of Debentures A/c	Dr.		1,00,000
	Loss On Issue of Debentures A/c	Dr.		50,000
	------To Debenture A/c				10,00,000
	------To Premium on Redemption A/c				50,000
	(Being 10,000 debenture of Rs.100 each issued at 10% discount with the term repayable at 5% redemption)

	Debentures A/c	Dr.		10,00,000
	Premium on Redemption A/c	Dr.		50,000
	------To Debenture holders' A/c				10,50,000
	(Being debenture due for redemption along with premium on redemption)

	Debenture holders' A/c	Dr.		10,50,000
	------To Bank A/c				10,50,000
	(Being amount due for redemption paid to debenture holders)

Solution Ex. 35

Journal Entries
Sr. No.	Particulars		L.F.	Debit Rs.	Credit Rs.
a.	Bank A/c	Dr.		4,32,000
	------To Debenture Application and Allotment A/c				4,32,000
	(Being application money received on 4,000 9% debentures )

	Debenture Application and Allotment A/c	Dr.		4,32,000
	Loss on Issue of Debentures A/c	Dr.		40,000
	------To 9% Debenture A/c				4,00,000
	------To Securities Premium Reserve A/c				32,000
	------To Premium on Redemption of debentures A/c				40,000
	(Being 4,000 9% debenture issued at a premium of Rs.8 and redeemable at premium of 10%)

b.	Bank A/c	Dr.		6,00,000
	------To Debenture Application and Allotment A/c				6,00,000
	(Being application money received on 6,000 9% debentures)

	Debenture Application and Allotment A/c	Dr.		6,00,000
	Loss On Issue of Debentures A/c	Dr.		60,00
	------To 9% Debenture A/c				6,00,000
	------To premium on Redemption of Debentures A/c				60,000
	(Being 6,000 9%debenture issued at par and redeemable at premium of 10%)

c.	Bank A/c	Dr.		10,50,000
	------To Debenture Application and Allotment A/c				10,50,000
	(Being application money received on 10,000 9% debentures)

	Debenture Application and Allotment A/c	Dr.		10,50,000
	------To 9% Debenture A/c				10,00,000
	------To Securities Premium Reserve A/c				50,000
	(Being 1,000 9% debentures issued at a premium of Rs.5)

Solution Ex. 36

Journal Entries
Sr. No.	Particulars		L.F.	Debit Rs.	Credit Rs.
a.	Bank A/c	Dr.		32,200
	------To Debenture Application and Allotment A/c				32,200
	(Being application money received 280 debentures Rs.115 each)

	Debenture Application and Allotment A/c	Dr.		32,200
	------To 10% Debenture A/c				28,000
	------To Securities Premium Reserve A/c				4,200
	(Being 280 10% debenture issued at a premium of 15%)

b.	Bank A/c	Dr.		33,000
	------To Debenture Application and Allotment A/c				33,000
	(Being application money received)

	Debenture Application and Allotment A/c	Dr.		33,000
	Loss On Issue of Debentures A/c	Dr.		4,500
	------To 10% Debenture A/c				30,000
	------To Securities Premium Reserve A/c				3,000
	------To Premium on Redemption of Debentures A/c				4,500
	(Being 300 10% debenture issued at a premium of 10% and redeemable at a premium of 15%)

c.	Bank A/c	Dr.		80,000
	------To Debenture Application and Allotment A/c				80,000
	(Being application money received)

	Debenture Application and Allotment A/c	Dr.		80,000
	Loss On Issue of Debentures A/c	Dr.		8,000
	------To 10% Debenture A/c				80,000
	------To Premium on Redemption of Debentures A/c				8,000
	(Being 800 10% debentures issued at a par and redeemable at premium of 10%)

Company Accounts - Issue of Debentures Exercise 9.56

Solution Ex. 37

Journal
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		85,500
	------To Debenture Application and Allotment A/c				85,500
	(900, 12% Debentures issued at a discount of 5%)

	Debenture Application and Allotment A/c	Dr.		85,500
	Loss on Issue of Debentures A/c	Dr.		13,500
	------To 12% Debentures A/c				90,000
	------To Premium on Redemption of Debentures A/c				9,000
	(900, 12% Debentures issued at a discount of 5%, redeemable at a premium of 10%)

Solution Ex. 38

Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		42,000
	------To Debenture Application A/c				42,000
	(Being 400 debentures issued at Rs.100 at a premium of 5%)

	Debenture Application A/c	Dr.		42,000
	------To 12% Debenture A/c				40,000
	------To Securities Premium A/c				2,000
	(Being 400 debentures issued at a premium of 5% and redeemable at par)

Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		73,500
	------To Debenture Application A/c				73,500
	(Being 700 debentures issued at Rs.100 at a premium of 5%)

	Debenture Application A/c	Dr.		73,500
	Loss On Issue of Debentures A/c	Dr.		7,000
	------To 12% Debenture A/c				70,000
	------To Securities Premium Reserve A/c				3,500
	------To Premium on Redemption A/c				7,000
	(Being 70,000 debenture issued at a premium of 5% and redeemable at Rs.110)

Solution Ex. 39

Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		36,000
	------To Debenture Application A/c				36,000
	(Being 400 debentures issued at Rs.100 at a premium 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
	(Being 400 debentures issued at discount and redeemable at par)

Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr.		88,000
	------To Debenture Application A/c				88,000
	(Being 800 debentures issued at Rs.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
	(Being 800 debenture issued at a premium of 10% and redeemable at a premium of 10%)

Solution Ex. 40

Books of XYZ Ltd. Journal Entries
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
2015
1st April	Bank A/c	Dr.		4,50,000
	------To Debenture Application A/c				4,50,000
	(Being application money received)

1st April	Debenture Application A/c	Dr.		4,50,000
	Loss On Issue of Debentures A/c	Dr.		1,00,000
	------To 10% Debenture A/c				5,00,000
	------To premium on Redemption A/c				50,000
	(Being 5,000 debentures of Rs.100 each issued at 10% discount with the term repayable at premium of 10%)
2015
30^th Sep	Interest on Debentures A/c	Dr.		25,000
	------To Debenture holders A/c				22,500
	------To Income Tax Payable A/c				2,500
	(Being interest due on 10% debentures)

30^th Sep	Debenture holders A/c	Dr.		22,500
	------To Bank A/c				22,500
	(Being interest on debentures paid to debenture holders)

30^th Sep	Income Tax Payable A/c	Dr.		2,500
	------To Bank A/c				2,500
	(Being payment of tax on interest on debentures)
2016
31^st Mar	Interest on debentures A/c	Dr.		25,000
	------To Debentures holders' A/c				22,500
	------To Income Tax Payable A/c				2,500
	(Being interest due on 10% debentures)

31^st Mar	Debenture holders A/c	Dr.		22,500
	------To Bank A/c				22,500
	(Being interest on debentures paid to debenture holders)

31^st Mar	Income Tax Payable A/c	Dr.		2,500
	------To Bank A/c				2,500
	(Being payment of tax on interest on debentures)

31^st Mar	Profit and Loss A/c	Dr.		50,000
	------To Interest on debentures A/c				50,000
	(Being interest on debentures transferred to profit and loss account)

Working Note:

Solution Ex. 41

In the books of Bright Ltd. Journal
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
2016
31^st Mar	Debentures Interest A/c	Dr.		25,000
	------To Debenture holders A/c				22,500
	------To Income Tax Payable A/c				2,500
	(Being debentures interest due)

	Debenture holders A/c	Dr.		22,500
	Income Tax Payable A/c	Dr.		2,500
	------To Bank A/c				25,000
	(Being interest on debentures paid)

31^st Mar	Statement of Profit and Loss A/c	Dr.		50,000
	------To Debentures Interest A/c				50,000
	(Being interest transferred to profit and loss)

Solution Ex. 42

Journal
Date	Particulars		L.F.	Debit Rs.	Credit Rs.
2015
Apr. 01	Bank A/c	Dr.		94,000
	------To Debenture Application and Allotment A/c				94,000
	(1,000, 9% Debentures issued at a discount of 6%)

	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
	(1,000, 9% Debentures issued at a discount of 6%, redeemable at a premium of 10%)

Sept 30	Debenture Interest A/c	Dr.		4,500
	------To Debentureholders' A/c				4,050
	------To TDS Payable A/c				450
	(Interest on debentures due)

	Debentureholders' A/c	Dr.		4,050
	------To Bank A/c				4,050
	(Payment of interest to debentureholders')

	TDS Payable A/c	Dr.		450
	------To Bank A/c				450
	(Payment of tax to government)
2016
Mar 31	Debenture Interest A/c	Dr.		4,500
	------To Debentureholders' A/c				4,050
	------To TDS Payable A/c				450
	(Interest on debentures due)

	Debentureholders' A/c	Dr.		4,050
	------To Bank A/c				4,050
	(Payment of interest to debentureholders')

	TDS Payable A/c	Dr.		450
	------To Bank A/c				450
	(Payment of tax to government)

Solution Ex. 43

Journal
Date	Particulars		L.F.	Dr. Rs.	Cr. Rs.

	Security Premium Reserve A/c (2,00,000 × 5%)	Dr.		10,000
	-------- To Discount on Issue of Debentures A/c (2,00,000 × 5%)				10,000
	(Being discount on Issue of Debentures written off)

Solution Ex. 44

Journal
Date	Particulars		L.F.	Dr. Rs.	Cr. Rs.
2017
1^stApril	Bank A/c	Dr.		9,40,000
	-------- To Debenture Application and Allotment A/c				9,40,000
	(Being application money received on issue of Debenture)

1^stApril	Debenture Application and Allotment A/c	Dr.		9,40,000
	Discount on Issue of Debenture A/c	Dr.		60,000
	-------- To 9% Debenture A/c				10,00,000
	(Being application money transferred to Debentures A/c)

2018
31^st Mar	Statement of Profit andLoss A/c	Dr.		20,000
	-------- To Discount on Issue of Debenture A/c				20,000
	(Being discount on Issue of Debenture written off)

2019
31^st Mar	Statement of Profit andLoss A/c	Dr.		16,000
	-------- To Discount on Issue of Debenture A/c				16,000
	(Being discount on Issue of Debenture written off)

2020
31^st Mar	Statement of Profit andLoss A/c	Dr.		12,000
	-------- To Discount on Issue of Debenture A/c				12,000
	(Being discount on Issue of Debenture written off)

2021
31^st Mar	Statement of Profit andLoss A/c	Dr.		8,000
	-------- To Discount on Issue of Debenture A/c				8,000
	(Being discount on Issue of Debenture written off)

2022
31^st Mar	Statement of Profit andLoss A/c	Dr.		4,000
	-------- To Discount on Issue of Debenture A/c				4,000
	(Being discount on Issue of Debenture written off)

Working Note

Calculation discount amount to be written off every year

Solution Ex. 45

In the books of Raha Ltd. Journal Entries
Date 2017	Particulars		L.F.	Debit Rs.	Credit Rs.
Jan. 01	Bank A/c	Dr.		8,00,000
	------To Debenture Application and Allotment A/c				8,00,000
	(Being application and allotment money received for 8% Debentures)

	Debenture Application and Allotment A/c	Dr.		6,00,000
	Loss on Issue of Debentures A/c	Dr.		30,000
	------To 8% Debenture A/c				6,00,000
	------To Premium on Redemption of Debentures A/c				30,000
	(Being allotment of 8% Debentures issued at par but redeemable at premium)

Mar 31, 2018	Securities Premium Reserve A/c	Dr.		10,000
	Statement of Profit and Loss A/c	Dr.		20,000
	------To Loss on Issue of Debentures A/c				30,000
	(Being loss on issue of debentures written off from Securities Premium Reserve and from Statement of PandL)

Working Note:

Solution Ex. 46

Journal
Date	Particulars		L.F.	Dr. Rs.	Cr. Rs.

	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)

Note : Same entry to be passed for next two years

Loss on issue of Debentures = 10,000 × 9% = 90,000

Loss on Issue of Debentures A/c
Dr.					Cr.
Year	Particular	Rs.	Year	Particular	Rs.

I year	To 8% Debentures A/c	90,000	I year	By Statement of Profit and Loss A/c	30,000
				By Balance c/d	60,000
		90,000			90,000
II year	To Balance b/d	60,000	II year	By Statement of Profit and Loss A/c	30,000
				By Balance c/d	30,000
		60,000			60,000
III year	To Balance b/d	30,000	III year	By Statement of Profit and Loss A/c	30,000

		30,000			30,000

Company Accounts - Issue of Debentures Exercise 9.57

Solution Ex. 47

Extract of Balance Sheet as on March 31, 2017
Particulars	Note No.	Rs.
I. Assets
--1. Non-Current Assets
----a. Other Non-Current Assets	1	1,20,000
--2. Current Assets
---a. Other Current Assets	2	40,000
Total		1,60,000

NOTES TO ACCOUNTS
Note No.	Particulars		Rs.
1.	Other Non-Current Assets
	Loss on issue of Debentures	1,60,000
	Less: Disclosed as Other Current Assets	(40,000)	1,20,000

2.	Other Current Assets
	--- Loss on issue of Debentures		40,000

Extract of Balance Sheet As on March 31, 2018
Particulars	Note No.	Rs.
I. Assets
--1. Non-Current Assets
----a. Other Non-Current Assets		80,000
--2. Current Assets
----a. Other Current Assets		40,000
Total		1,20,000

NOTES TO ACCOUNTS
Note No	Particulars		Rs.
1.	Other Non-Current Assets
	Loss on issue of Debentures	1,20,000
	Less: Shown as Other Current Assets	(40,000)	80,000

2.	Other Current Assets
	Loss on issue of Debentures		40,000

Solution Ex. 48

In the books of Solar Power Ltd. Journal Entries
Date 2017	Particulars		L.F.	Debit Rs.	Credit Rs.
Apr. 01	Bank A/c	Dr.		9,50,000
	------To Debenture Application and Allotment A/c				9,50,000
	(Being application and allotment money received for 8%Debentures @Rs 95 each)

	Debenture Application and Allotment A/c	Dr.		9,50,000
	Loss on Issue of Debentures A/c	Dr.		2,00,000
	------To 8% Debenture A/c				10,00,000
	------To Premium on Redemption of Debentures A/c				1,50,000
	(Being 8% Debentures issued at discount but redeemable at premium)

Mar 31, 2018	Securities Premium Reserve A/c	Dr.		80,000
	Statement of Profit and Loss A/c	Dr.		1,20,000
	------To Loss on Issue of Debentures A/c				2,00,000
	(Being loss on issue of debentures written off from Securities Premium Reserve and balance from Statement of PandL)

Extract of Balance Sheet As on March 31, 2018
Particulars	Note No.	Rs.
I. Equity and Liabilities
--Shareholders' Funds
----a. Reserves and Surplus	1	(1,20,000)
Total		(1,20,000)

NOTES TO ACCOUNTS
Note No	Particulars		Rs.
1.	Reserves and Surplus
	Securities Premium Reserve	80,000
	Less: Loss on Issue of Debentures w/off	80000
	Surplus, i.e. Balance in Statement of PandL
	Opening Balance	0
	Less: Loss on Issue of Debentures w/off	1,20,000	(1,20,000)
			(1,20,000)

Solution Ex. 49

In the books of Mathew Ltd. Journal Entries
Date 2015	Particulars		L.F.	Debit Rs.	Credit Rs.
Apr. 01	Bank A/c	Dr.		9,50,000
	------To Debenture Application and Allotment A/c				9,50,000
	(Being application and allotment money received for 9% Deb. @ Rs 95 each)

	Debenture Application and Allotment A/c	Dr.		9,50,000
	Loss on Issue of Debentures A/c	Dr.		1,00,000
	------To 9% Debenture A/c				10,00,000
	------To Premium on Redemption of Debentures A/c				50,000
	(Being 9% Debentures issued at discount and redeemable at premium)

9% Debentures A/c
Dr.					Cr.
Year	Particular	Rs.	Year	Particular	Rs.
March 31, 2016	To Debenture holders A/c	2,00,000	April 01, 2015	By Debenture Application and Allotment A/c	9,50,000
March 31	To Balance c/d	8,00,000		By Loss on Issue of Debentures A/c	50,000
2017		10,00,000	2016		10,00,000
March 31	To Debenture holders	5,00,000	April 01	By Balance b/d	8,00,000
March 31	To Balance c/d	3,00,000
2018		8,00,000	2017		8,00,000
March 31	To Debenture holders	3,00,000	April 01	By Balance b/d	3,00,000

		3,00,000			3,00,000

Loss on Issue of Debentures A/c
Dr.					Cr.
Year	Particular	Rs.	Year	Particular	Rs.
2015			2016
April 01	To 9% Debentures A/c	1,00,000	March 31	By Statement of Profit and Loss A/c	1,00,000
				By Balance c/d	Nil
		1,00,000			1,00,000

Premium on Redemption of Debentures A/c
Dr.					Cr.
Year	Particular	Rs.	Year	Particular	Rs.
2016			2015
March 31	To Debenture holders' A/c	10,000	April 01	By Loss on Issue of Debentures A/c	50,000
	To Balance c/d	40,000
		50,000	2016		50,000
2017	To Debenture holders' A/c	25,000	April 01	By Balance b/c	40,000
March 31	To Balance c/d	15,000
		40,000			40,000
2018	To Debenture holders' A/c	15,000	2017	By Balance c/d	15,000
March 31			April 01
		15,000			15,000

Solution Ex. 50

In the books of Office Products Ltd. Journal Entries
Date 2018	Particulars		L.F.	Debit Rs.	Credit Rs.
Apr. 01	Bank A/c	Dr.		22,00,000
	------To Debenture Application and Allotment A/c				22,00,000
	(Being application and allotment money received for 9%Deb. @Rs 110 each)

	Debenture Application and Allotment A/c	Dr.		22,00,000
	Loss on Issue of Debentures A/c	Dr.		1,00,000
	------To 9% Debenture A/c				20,00,000
	------To Securities Premium Reserve A/c				2,00,000
	------To Premium on Redemption of Debentures A/c				1,00,000
	(Being 8% Debentures issued at premium and redeemable at premium)

Mar 31, 2019	Securities Premium Reserve A/c	Dr.		1,00,000
	------To Loss on Issue of Debentures A/c				1,00,000
	(Being loss on issue of debentures written off from Securities Premium Reserve)

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Class 12-commerce T S GREWAL Solutions Accountancy Chapter 9: Company Accounts - Issue of Debentures

Company Accounts - Issue of Debentures Exercise 9.51

Solution Ex. 1

Solution Ex. 2

Solution Ex. 3

Company Accounts - Issue of Debentures Exercise 9.52

Solution Ex. 4

Solution Ex. 5

Solution Ex.6

Solution Ex. 7

Solution Ex. 8

Solution Ex. 9

Solution Ex. 10

Solution Ex.11

Solution Ex. 12

Company Accounts - Issue of Debentures Exercise 9.53

Solution Ex. 13

Solution Ex. 14

Solution Ex. 15

Solution Ex. 16

Solution Ex. 17

Solution Ex. 18

Solution Ex. 19

Company Accounts - Issue of Debentures Exercise 9.54

Solution Ex. 20

Solution Ex. 21

Solution Ex. 22

Solution Ex. 23

Solution Ex. 24

Solution Ex. 25

Solution Ex. 26

Company Accounts - Issue of Debentures Exercise 9.55

Solution Ex. 27

Solution Ex. 28

Solution Ex. 29

Solution Ex. 30

Solution Ex. 31

Solution Ex. 32

Solution Ex. 33

Solution Ex. 34

Solution Ex. 35

Solution Ex. 36

Company Accounts - Issue of Debentures Exercise 9.56

Solution Ex. 37

Solution Ex. 38

Solution Ex. 39

Solution Ex. 40

Solution Ex. 41

Solution Ex. 42

Solution Ex. 43

Solution Ex. 44

Solution Ex. 45

Solution Ex. 46

Company Accounts - Issue of Debentures Exercise 9.57

Solution Ex. 47

Solution Ex. 48

Solution Ex. 49

Solution Ex. 50

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