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Question
Pass necessary journal entries in the following cases
Kay Ltd. converted 3,000, 12% debentures of Rs 100 each issued at a premium of 10% into equity shares of Rs 100 each issued at a premium of 25%.
Solution
| Books of Kay Ltd. Journal Entry |
||||
| Date | Particulars | L.F. |
Dr. Rs |
Cr. Rs |
|
12% Debenture A/c Dr. To Debenture holder A/c (Being 3,000 12% debenture of Rs 100 each issue at a discount of 6% due for redemption) |
3,00,000
|
3,00,000
|
||
|
Debenture Holder A/c Dr. To Equity share capital A/c To Securities premium A/c (Being payment made to debenture holder by issuing 2,400 equity share of Rs 100 each premium of Rs 25%) |
3,00,000
|
2,40,000 60,000
|
||
Working Note:
Number of shares to be issued = `" Amount Payable to Debentureholder"/"Price of a Share"`
Number of share to be issued = `"3,00,000"/"125(100 + 25)"` = 2,400 share
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