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Question
Jain Ltd. converted 500, 8% debentures of Rs 100 each issued at a discount of 6% into equity shares of Rs 10 each issued at a premium of Rs 25 per share. Discount on issue of 8% debentures has not yet been written off. Showing your working notes clearly, pass necessary journal entries for conversion of 8% debentures into equity shares.
Solution
| Journal | ||||
| Date | Particulars | L.F. |
Dr. Rs |
Cr. Rs |
|
8% Debentures A/c Dr. To Debenture holder’s A/c (500 × Rs 100) (Being 200, 9%Debenture due for redemption.) |
20,000
|
20,000
|
||
|
Debenture holder’s A/c Dr. To Equity Share Capital A/c (1,600 × 10) To Securities Premium A/c (1,600 × 2.50) (Being 200, 8% Debentures redeemed by converting into1,600 equity shares of Rs 10 each issued at a Premium of Rs 25%) |
20,000
|
16,000 4,000
|
||
|
Securities Premium A/c Dr To Discount on Issued of Debentures A/c (Being Discount on issue of Debentures written off against the balance in Securities Premium Account.) |
1,200
|
12,00
|
||
Working Note:
No. of Equity Share = `" Amount Payable"/"Issued Price"`
`=(20,000)/12.5=1,600`
No. of Equity Share = 1,600 shares.
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|
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|
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| 1. Non-current Assets | |||
| (a)Fixed Assets | 5 | ||
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