Question

Pass necessary journal entries relating to issue of debentures and to write off discount/loss on issue of debentures in the books of Ajanta Ltd. in the following cases:

1. 200, 9% debentures of ₹ 1,000 each are issued at 10% discount and redeemable at par. Balance in Securities Premium account is % 15,000.
2. 300, 11% debentures of ₹ 1,000 each are issued at 5% discount and redeemable at a premium of 10%. Balance in Securities Premium account is ₹ 35,000.

Answer 1

In the books of Ajanta Ltd. Journal Entries
Date	Particulars	L.F.	Amount (₹)	Amount (₹)
i.	Bank A/c   ...Dr.		1,80,000	-
	To 9% Debenture Application & Allotment A/c		-	1,80,000
	(Receipt of application money)
	9% Debenture Application & Allotment A/c   ...Dr.		1,80,000	-
	Discount on Issue of Debentures A/c   ...Dr.		20,000	-
	To 9% Debentures A/c		-	2,00,000
	(Allotment of debentures at a discount)
	Securities Premium A/c   ...Dr.		15,000	-
	Statement of Profit and Loss A/c   ...Dr.		5,000	-
	To Discount on Issue of Debentures A/c		-	20,000
	(Loss on issue of debentures written-off)
ii.	Bank A/c   ...Dr.		2,85,000	-
	To Debenture Application & Allotment A/c		-	2,85,000
	(Receipt of application money)
	Debenture Application & Allotment A/c   ...Dr.		2,85,000	-
	Loss on Issue of Debentures A/c   ...Dr.		45,000	-
	To 11 % Debentures A/c		-	3,00,000
	To Premium on Redemption of Debentures A/c		-	30,000
	(Allotment of debentures at a discount and redeemable at premium)
	Securities Premium A/c   ...Dr.		35,000	-
	Statement of Profit and Loss A/c   ...Dr.		10,000	-
	To Loss on Issue of Debentures A/c		-	45,000
	(Loss on issue of debentures written-off)