Question

A company took a loan of  ₹ 4,00,000 from Bandhan Bank Ltd. and issued  8% Debentures of  ₹ 4,00,000 as a collateral security.

Answer 1

When Debentures Issued as Collateral Security are shown separately 

Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c	Dr.		4,00,000
	To Loan from Bandhan Bank Ltd.				4,00,000
	(Loan taken against issuing 8% Debentures as collateral security)
	Debenture Suspense A/c	Dr.		4,00,000
	To 8% Debenture A/c				4,00,000
	(Debentures issued as collateral security)

Posting in the Company's Balance Sheet (When Debentures Issued as Collateral Security are shown separately) 

Balance Sheet

Particulars	Note No.	Amount  (Rs)
I Equity and Liabilities
1.Shareholders’ Funds
2.Non-Current Liabilities
a. Long-Term Borrowings	1	4,00,000
3.Current Liabilities
Total		4,00,000
II Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents	2	4,00,000
Total		4,00,000

NOTES TO ACCOUNTS 

Note No.	Particulars		Amount (Rs)
1	Long-Term Borrowings
	Secured:
	Loan from Bandhan Bank (Secured by issue of  Debentures of Rs 4,00,000)		4,00,000
	8% Debentures (Issued as Collateral Security to Bank against Loan)	4,00,000	-
	Less: Debenture Suspense Account	4,00,000
			4,00,000
2	Cash and Cash Equivalents
	Cash at Bank		4,00,000

Alternative Method: When debentures Issued as Collateral Security are not shown separately 

 

Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c	Dr.		4,00,000
	To Loan From Bandhan Bank Ltd.				4,00,000
	(Loan taken from Bandhan Bank secured by issuing Debentures as collateral security)

(When Debentures Issued as Collateral Security are not shown separately) 

Balance Sheet

Particulars	Note No.	Amount  (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
2. Non-Current Liabilities
a. Long-Term Borrowings	1	4,00,000
3. Current Liabilities
Total		4,00,000
II. Assets
1. Non-Current Assets
2. Current Assets
a. Cash and Cash Equivalents	2	4,00,000
Total		4,00,000

NOTES TO ACCOUNTS

Note No.	Particulars	Amount (Rs)
1	Long-Term Borrowings
	Secured:
	Loan from Bandhan Bank (Secured by issue of  8% Debentures of Rs 4,00,000 as Collateral Security)	4,00,000
2	Cash and Cash Equivalents
	Cash at Bank	4,00,000