Question

Best Barcode Ltd. took a loan of  ₹ 5,00,000 from a bank giving  ₹ 6,00,000; 9% Debentures as collateral security. Pass journal entries regarding issue of debentures , if any, and show this loan in the Balance Sheet of the company.

Answer 1

Best Barcode Ltd.
Balance Sheet

Particulars	Note No.	Amount  (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
2. Non-Current Liabilities
a. Long-Term Borrowings	1	5,00,000
3. Current Liabilities
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	Amount (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 Amount Rs	Credit Amount Rs
	Bank A/c	Dr.		5,00,000
	To Loan A/c				5,00,000
	(Loan taken against issuing 9% Debentures as collateral Security)

Alternative Method:   

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

Posting in the Company's Balance Sheet

Best Barcode Ltd.
Balance Sheet

Particulars	Note No.	Amount  (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
2. Non-Current Liabilities
a. Long-Term Borrowings	1	5,00,000
3. Current Liabilities
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		Amount (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% Debentures (Issued as Collateral Security to Bank against loan)	6,00,000	-
	Less: Debenture Suspense Account	6,00,000
			5,00,000
2	Cash and Cash Equivalents
	Cash at Bank		5,00,000