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Question
Pioneer Fitness Ltd. took over the running business of Healthy World Ltd. having assets of ₹ 10,00,000 and liabilities of ₹ 1,70,000 by:
- Issuing 8,000 8% Debentures of ₹ 100 each at 5% premium redeemable after 6 years @ ₹ 110; and
- Cheque for ₹ 50,000.
Pass the Journal entries in the books of Pioneer Fitness Ltd.
Solution
| Date | Particulars | L.F | Dr (₹) | Cr (₹) |
| Assets A/c ...Dr. | 10,00,000 | |||
| Goodwill A/c ...Dr. | 60,000 | |||
| To Liabilities A/c | 1,70,000 | |||
| To Healthy World ltd. | 8,90,000 | |||
| (Being assets and liability taken over) | ||||
| Healthy World Ltd. ...Dr | 8,90,000 | |||
| Loss on issue of Debentures A/c ...Dr. | 80,000 | |||
| To 8% Debentures A/c | 8,00,000 | |||
| To Securities Premium A/c | 40,000 | |||
| To Premium on redemption A/c | 80,000 | |||
| To Bank A/c | 50,000 | |||
| (Being Purchase consideration discharged by issue of Debentures and in Cash) |
RELATED QUESTIONS
Debenture certificate must be issued within ___________ months of allotment.
KTR Ltd., issued 365, 9% Debentures of `1,000 each on 4-3-2016. Pass necessary journal entries for the issue of debentures in the following situations:
(a) When debentures were issued at par redeemable at a premium of 10%.
(b) When debentures were issued at 6% discount redeemable at 5% premium.
On 2.3.2016 L and B Ltd. issued 635, 9% debentures of Rs.500 each. Pass necessary journal entries for the issue of debentures in the following situations:
(a) When debentures were issued at 5% discount, redeemable at 10% premium.
(b) When debentures were issued at 12% premium, redeemable at 6% premium.
Pass the necessary journal entries for an issue of 1,000, 7% Debentures of `100 each in the following cases:
1) Issued at 5% premium redeemable at a premium of 10%.
2) Issued at a discount of 5% redeemable at par.
Taneja Constructions Ltd. has an outstanding balance of Rs 5,00,000, 7% debentures of Rs 100 each redeemable at a premium of 10%. According to the terms of redemption, the company redeemed 30% of the above debentures by converting them into shares of Rs 50 each at a premium of 20%. Record the entries for the redemption of debentures in the books of Taneja Constructions Ltd.
Pass the necessary journal entries for the issue of debentures in the following cases:
Rs 30,000, 12% debentures of Rs 100 each issued at a discount of 5% redeemable at par.
Pass the necessary journal entries for the issue of debentures in the following cases:
Rs 60,000, 12% debentures of Rs 100 each issued at a discount of 5% redeemable at Rs 105.
A company with share capital must issue ...................... shares.
Match the correct pairs of words from group A and B :
| Group A | Group B |
| (a) Dividend | (1) Security about repayment |
| (b) Financial plan | (2) 1875 |
| (c) Secured debentures | (3) Return on investment of shareholders |
| (d) American depository receipt | (4) 1857 |
| (e) Establishment of Bombay Stock Exchange | (5) Management of business funds |
| (6) Repaid on maturity | |
| (7) Debenture certificate holder | |
| (8) Advance programming of financial management | |
| (9) A receipt is traded in a country other than the USA | |
| (10) A receipt is traded in the USA |
Write notes on Procedure for redemption of debentures.
State, with reasons, whether the following statements are True
or False (Any THREE) :
Convertible debentures can be converted into equity shares.
Define debenture. explain types of debentures.
Explain the secretarial procedure regarding issue of debentures.
While issuing _______ type of Debentures, company doesn’t give any undertaking for the repayment of money borrowed by issuing such debentures.
Elite Ltd. issued 20,000, 9% Debentures of ₹ 100 each at a discount of 10%, redeemable at a premium. On issue of these debentures, 'Loss on Issue of debentures account' was debited with ₹ 4,00,000. The premium on redemption of debentures is ______.
Sinco Ltd. purchased assets of the book value of ₹ 1,98,000 from Dixon Ltd. It was agreed that the purchase consideration be paid by issuing 10% debentures of 100 each.
Record the necessary journal entries in the books of Sinco Ltd. assuming that the debentures have been issued:
- At a discount of 10%.
- At a premium of 10%.
On 1.4.2021 Y Ltd. invited applications for issuing 10,000, 9% debentures of ₹ 100 each at a discount of 6%. The entire amount was payable with application. Application for 12,000, 9% debentures were received. 9% debentures were allotted on pro-rata basis to all the applications. Excess money received with applications was refunded.
On 31.3.2022 the company decided to write off discount on issue of debentures according to the provisions of the Companies Act, 2013. On that date the company had ₹ 10,000 in its securities premium reserve account.
Pass necessary journal entries for the above transactions in the books of the company.
