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Question
On July 01, 2022, Panther Ltd. issued 20,000, 9% Debentures of ₹ 100 each at 8% premium and redeemable at a premium of 15% in four equal instalments starting from the end of the third year. The balance in Securities Premium on the date of issue of debentures was ₹ 80,000. Interest on debentures was to be paid on March 31 every year.
Pass Journal entries for the financial year 2022-23. Also prepare Loss on Issue of Debentures account.
Solution
| Journal Entries in the Books of Panther Ltd. | ||||
| Date | Particulars | L.F | Debit (₹) | Credit (₹) |
| July 1 2022 | Bank A/c ...Dr. | 21,60,000 | ||
| To Debenture Application and Allotment A/c | 21,60,000 | |||
| (Being Application money received) | ||||
| July 1 2022 | Debenture Application and Allotment ...Dr. | 21,60,000 | ||
| Loss on Issue of Debentures A/c ...Dr | 3,00,000 | |||
| To 9% Debentures A/c | 20,00,000 | |||
| To Securities Premium A/c | 1,60,000 | |||
| To Premium on Redemption of Debentures A/c | 3,00,000 | |||
| (Being Debentures issued) | ||||
| Mar. 31 2022 | Debenture Interest A/c ...Dr | 1,35,000 | ||
| To Debenture holders A/c | 1,35,000 | |||
| (Being Interest due on debentures) | ||||
| Mar. 31 2022 | Debenture holders A/c ...Dr. | 1,35,000 | ||
| To Bank A/c | 1,35,000 | |||
| (Being interest paid to debenture holders) | ||||
| Mar. 31 2022 | Statement of Profit and Loss ...Dr. | 1,35,000 | ||
| To Debenture Interest A/c | 1,35,000 | |||
| (Interest on Debentures charged from Statement of Pnl) | ||||
| Mar. 31 2022 | Securities Premium A/c ...Dr. | 2,40,000 | ||
| Statement of Profit and Loss ...Dr. | 60,000 | |||
| To Loss on Issue of Debentures A/c | 3,00,000 | |||
| (Loss on Issue of Debentures written off) | ||||
| Loss on Issue of Debentures A/c | |||||
| Date | Particulars | Amount (₹) | Date | Particulars | Amount (₹) |
| 01 July 2022 | To Premium on Redemption of Debentures A/c | 3,00,000 | 31 Mar. 2023 | By Securities Premium A/c | 2,40,000 |
| 31 Mar. 2023 | By Statement of Profit and Loss | 60,000 | |||
| 3,00,000 | 3,00,000 | ||||
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Answer in a sentence only.
What is meant by ‘Issue of debenture at discount and redeemable at premium’?
Write one word/term/phrase which can substitute the following
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State to whether the following statement is True/False.
The issue of debentures less than face value of debenture to termed as issue of debentures at discount.
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Pass Journal entries and show how the amounts appear in Balance Sheet.
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- Prepare Loss on Issue of Debentures Account assuming there was existing balance of Securities Premium Account of ₹ 2,80,000.
- Pass entries for Interest on debentures on March 31, 2022 assuming interest is payable on 30 September and 31 March every year.
Pass journal entries relating to issue of debentures for the following transactions:
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- Issued 4,000, 12% debentures of ₹ 100 each at 10% premium, redeemable at 6% premium.
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- Issued ₹ 5,00,000, 9% debentures of ₹ 100 each at 10% premium redeemable at par.
- Issued ₹ 6,000, 9% debentures of ₹ 100 each at a discount of 10% redeemable at par.
Pass necessary journal entries for the issue of debentures in the following cases :
- Issued ₹ 75,00,000, 9% debentures of ₹100 each at a premium of 10% redeemable at a premium of 5% after 3 years.
- Issued 8,000, 9% debentures of ₹100 each at a discount of 6% redeemable at a premium of 3% after 5 years.
- Issued 90,000, 9% debentures of ₹100 each at par, redeemable at par after 4 years.
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Pass necessary journal entries in the books of Vimal Ltd. for the above transactions.
