Request a call back

Join NOW to get access to exclusive study material for best results

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

 

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

 

 

a.  

 

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)

 

 

b.  

 

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

 

a.  

 

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)

 

 

 

b.  

 

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

 

30th 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)

 

 

30th Sep

Debenture holders A/c

Dr.

22,500

 

------To Bank A/c

 

 

 

22,500

 

(Being interest on debentures paid to debenture holders)

 

 

 

 

 

 

 

 

 

 

30th Sep 

Income Tax Payable A/c

Dr.

 

2,500

 

 

------To Bank A/c 

 

 

 

2,500

 

(Being payment of tax on interest on debentures)

 

 

 

 

2016

 

 

 

 

 

31st 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)

 

 

 

 

 

 

 

 

 

 

31st Mar

Debenture holders A/c

Dr.

 

22,500

 

 

------To Bank A/c

 

 

 

22,500

 

(Being interest on debentures paid to debenture holders) 

 

 

 

 

 

 

 

 

 

 

31st Mar

Income Tax Payable A/c

Dr.

 

2,500

 

 

------To Bank A/c 

 

 

 

2,500

 

(Being payment of tax on interest on debentures)

 

 

 

 

 

 

 

 

 

 

31st 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

 

31st 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)

 

 

31st 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

 

 

 

 

 

1st April

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)

 

 

 

 

 

 

 

 

 

 

1st April

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

 

 

 

 

 

31st 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

 

 

 

 

 

31st 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

 

 

 

 

 

31st 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

 

 

 

 

 

31st 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

 

 

 

 

 

31st 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)

 

 

 

 

 

 

Get Latest Study Material for Academic year 24-25 Click here
×