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Question
Archana Ltd. issued 2,000 10% Debentures of Rs 100 each at a premium of Rs 10 per Debenture payable as follows:
On Application : Rs. 50
On Allotment : Rs. 60 (Premium included Rs. 10)
The Debentures were fully subscribed and all money was duly received.
Pass Journal entries and show how the amounts appear in Balance Sheet.
Solution
Books of Archana Ltd.
Journal Entry
| Date | Particulars | L.F. | Debit Amount (Rs.) | Credit Amount (Rs.) |
| Bank A/c Dr. To Debenture Application A/c (Debenture application money received on 2,000, 10% Debentures of Rs 50 each) |
100,000 | 100,000 | ||
|
Debenture Application A/c Dr. |
100,000 | 100,000 | ||
|
Debenture Allotment A/c Dr. |
120,000 | 100,000 20,000 |
||
| Bank A/c Dr. To Debenture Allotment A/c (Debenture allotment money received) |
120,000 | 120,000 |
Balance Sheet of Archana Ltd.
| Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
| Reserves and Surplus Securities Premium |
20,000 | Cash at bank | 220,000 |
| Secured Loan 10% Debentures |
200,000 | ||
| 220,000 | 220,000 | ||
Working Note:
Face value of a Debenture = Rs. 100
Securities Premium = Rs.10
∴ Issue Price = Rs. 110.
Note : As per the textbook solution 2,500, 10% Debentures were issued but according to the question 2,000, 10% Debentures were issued. Therefore, our solution is as per the information provided in the question.
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