Question

Bharat Ltd. had an authorized capital of Rs 20,00,000 divided into 2,00,000 equity shares of Rs  10 each. The company issued 1,00,000 shares and the dividend paid per share was Rs 2 for the year ended 31-3-2008. The management of the company decided to export its products to the neighbouring countries Nepal, Bhutan, Sri Lanka and Bangladesh. To meet the requirement of additional funds the financial manager of the company put up the following three alternatives before its Board of Directors :

1) Issue 54,000 equity shares.

2) Obtain a loan from Import and Export Bank of India. The loan was available at 12% per annum interest.

3) To issue 9% Debentures at a discount of 10%.

After comparing the available alternatives the company decided on 1-4-2008 to issue 6,000 9% debentures of Rs 100 each at a discount of 10%. These debentures were redeemable in four installments starting from the end of the third year. The amount of debentures to be redeemed at the end of the third, fourth, fifth and sixth year was as follows:

Years	Profit (Rs)
III	1,00,000
IV	1,00,000
V	2,00,000
VI	2,00,000

Prepare 9% Debentures Account for the year 2008-09 to 2013-14

Answer 1

9% Debentures A/c
Dr.							Cr.
Date	Particulars	J.F.	Rs	Date	Particulars	J.F.	Rs
2008-09	To Balance c/d		6,00,000	2008-09	By Debenture Application A/c By Loss on Issue of Debentures A/c		5,40,000 60,000
			6,00,000				6,00,000
2009-10	To Balance c/d		6,00,000	2009-10	By Balance b/d		6,00,000
			6,00,000				6,00,000
2010-11	To Debenture holder’s A/c To Balance c/d		1,00,000 5,00,000	2010-11	By Balance b/d		6,00,000
			6,00,000				6,00,000
2011-12	To Debenture holder’s A/c To Balance c/d		1,00,000 4,00,000	2011-12	By Balance b/d		5,00,000
			5,00,000				5,00,000
2012-13	To Debenture holder’s A/c To Balance c/d		2,00,000 2,00,000	2012-13	By Balance b/d		4,00,000
			4,00,000				4,00,000
2013-14	To Debenture holder’s A/c		2,00,000	2013-14	By Balance b/d		2,00,000
			2,00,000				2,00,000