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Question
Chiranjeevi Limited issued 2,000, 10% debentures of ₹ 100 each. Pass the necessary Journal entries for the issue of debentures in the following cases:
- When debentures were issued at 10% premium, redeemable at 5% premium.
- When debentures were issued at 5% discount, redeemable at 10% premium.
- When debentures were issued at par, redeemable at a premium of 10%
Solution
| In the Books of Chiranjeevi Limited Journal |
||||
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
| (a) | Bank A/c ...Dr. | 2,20,000 | ||
| To 10% Debenture Application & Allotment A/c | 2,20,000 | |||
| (Being application money received) | ||||
| 10% Debenture Application & Allotment A/c ...Dr. | 2,20,000 | |||
| Loss on Issue of Debentures A/c ...Dr. | 10,000 | |||
| To 10% Debentures A/c | 2,00,000 | |||
| To Securities Premium Reserve A/c | 20,000 | |||
| To Premium on Redemption of Debentures A/c | 10,000 | |||
| (Being transfer of application money to Debentures Account, issued at 10% premium and redeemable at a premium of 5%) | ||||
| (b) | Bank A/c ...Dr. | 1,90,000 | ||
| To 10% Debenture Application & Allotment A/c | 1,90,000 | |||
| (Being application money received) | ||||
| 10% Debenture Application & Allotment A/c ...Dr. | 1,90,000 | |||
| Loss on Issue of Debentures A/c (10,000+ 20,000) ...Dr. | 30,000 | |||
| To 10% Debentures A/c (2,000 x 100) | 2,00,000 | |||
| To Premium on Redemption of Debentures A/c | 20,000 | |||
| (Being transfer of application money to Debentures Account, issued at 5% discount and redeemable at 10% premium) | ||||
| (c) | Bank A/c ...Dr. | 2,00,000 | ||
| To 10% Debenture Application & Allotment A/c | 2,00,000 | |||
| 10% Debenture Application & Allotment A/c ...Dr. | 2,00,000 | |||
| Loss on Issue of Debentures A/c ...Dr. | 20,000 | |||
| To 10% Debentures A/c | 2,00,000 | |||
| To Premium on Redemption of Debentures A/c | 20,000 | |||
| (Being transfer of application money to Debentures Account, issued at par and redeemable at a premium of 10%) | ||||
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