Question

Pass Journal entries relating to the issue of debentures in the books of Novex Ltd. in each of the following cases:

1. Issued 30,000, 10% Debentures of ₹ 100 each at a premium of 10%, redeemable at par.
2. Issued 4,000, 10% Debentures of ₹ 100 each at a premium of 15%, redeemable at a premium of 10%.
3. Issued 5,000, 10% Debentures of ₹ 100 each at a discount of 5%, redeemable at a premium of 10%.

Answer 1

Journal Entries
In the books of Novex Limited
Date	Particulars	L.F.	Dr. Amount	Cr. Amount
(i)	Bank A/c   ...Dr.		33,00,000
	To Deb. App and Allot. A/c			33,00,000
	(Being debentures application and allotment money received)
	Deb. App. and Allotment A/c   ...Dr.		33,00,000
	To 10% Deb. A/c			30,00,000
	To Securities Premium A/c			3,00,000
	(Being debentures issued at premium, redeemable at par)
(ii)	Bank A/c   ...Dr.		4,60,000
	To Deb. App. and Allotment A/c			4,60,000
	(Being deb. application and allotment money received)
	Deb. App. and Allot. A/c   ...Dr.		4,60,000
	Loss on issue of deb. A/c   ...Dr.		40,000
	To 10% Deb. A/c			4,00,000
	To Securities Premium A/c			60,000
	To Premium on redemption of deb. A/c			40,000
	(Being debentures issued at a premium, redeemable at a premium)
(iii)	Bank A/c   ...Dr.		4,75,000
	To Deb. App. and Allot. A/c			4,75,000
	(Being deb. app. and allot. money received)
	Deb App. and Allot. A/c   ...Dr.		4,75,000
	Loss on issue of deb. A/c   ...Dr.		75,000
	To 10% Debentures A/c			5,00,000
	To Premium on Redemption of Deb. A/c			50,000
	(Being debentures issued at a discount, redeemable at a premium)