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Question
X.Ltd. issued 15,000, 10% debentures of Rs 100 each. Give journal entries and the Balance Sheet in each of the following cases:
(i) The debentures are issued at a premium of 10%;
(ii) The debentures are issued at a discount of 5%;
(iii) The debentures are issued as a collateral security to bank against a loan of Rs 12,00,000; and
(iv) The debentures are issued to a supplier of machinery costing Rs 13,50,000.
Solution
(i)
Books of X. Ltd.
Journal
|
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|||
|
|
Bank A/c |
Dr. |
|
16,50,000 |
|
||
|
|
|
To 10% Debentures A/c |
|
|
15,00,000 |
||
|
|
|
To Securities Premium A/c |
|
|
1,50,000 |
||
|
|
(Issued 15,000, 10% debentures of Rs 100 each at 10% premium) |
||||||
X Ltd.
Balance Sheet
|
Particulars |
Note No. |
Amount (Rs) |
|
I. Equity and Liabilities |
|
|
|
1. Shareholders’ Funds |
|
|
|
a. Reserves and Surplus |
1 |
1,50,000 |
|
2. Non-Current Liabilities |
|
|
|
a. Long-Term Borrowings |
2 |
15,00,000 |
|
3. Current Liabilities |
|
|
|
Total |
|
16,50,000 |
|
II. Assets |
|
|
|
1. Non-Current Assets |
|
|
|
2. Current Assets |
|
|
|
a. Cash and Cash Equivalents |
3 |
16,50,000 |
|
Total |
|
16,50,000 |
NOTES TO ACCOUNTS
|
Note No. |
Particulars |
Amount (Rs) |
|
1 |
Reserves and Surplus |
|
|
|
Securities Premium |
1,50,000 |
|
2 |
Long-Term Borrowings |
|
|
|
10% Debentures (Secured) |
15,00,000 |
|
3 |
Cash and Cash Equivalents |
|
|
|
Cash at Bank |
16,50,0 |
(ii)
|
Bank A/c |
Dr. |
14,25,000 |
|
||
|
Discount on Issue of Debentures A/c |
Dr. |
75,000 |
|
||
|
|
To 10% Debentures |
|
15,00,000 |
||
|
(Issued 15,000 10% Debenture of Rs 100 each at 5% discount) |
|
|
|||
X Ltd.
Balance Sheet
|
Particulars |
Note No. |
Amount (Rs) |
|
I. Equity and Liabilities |
|
|
|
1. Shareholder’s Funds |
|
|
|
2. Non-Current Liabilities |
|
|
|
a. Long-Term Borrowings |
1 |
15,00,000 |
|
3. Current Liabilities |
|
|
|
Total |
|
15,00,000 |
|
II. Assets |
|
|
|
1. Non-Current Assets |
|
|
|
a. Other Non-Current Assets |
2 |
75,000 |
|
2. Current Assets |
|
|
|
a. Cash and Cash Equivalents |
3 |
14,25,000 |
|
Total |
|
15,00,000 |
NOTES TO ACCOUNTS
|
Note No. |
Particulars |
Amount (Rs) |
|
1 |
Long-Term Borrowings |
|
|
|
10% Debentures (Secured) |
15,00,000 |
|
2 |
Other Non-Current Assets |
|
|
|
Discount on Issue of Debentures |
75,000 |
|
3 |
Cash and Cash Equivalents |
|
|
|
Cash at Bank |
14,25,000 |
(iii) No entry will be passed for issuing debentures as a collateral security
X Ltd.
Balance Sheet
|
Particulars |
Note No. |
Amount (Rs) |
|
I. Equity and Liabilities |
|
|
|
1. Shareholders’ Funds |
|
|
|
2. Non-Current Liabilities |
|
|
|
a. Long-Term Borrowings |
1 |
12,00,000 |
|
3. Current Liabilities |
|
|
|
Total |
|
12,00,000 |
|
II. Assets |
|
|
|
1. Non-Current Assets |
|
|
|
2. Current Assets |
|
|
|
a. Cash and Cash Equivalents |
2 |
12,00,000 |
|
Total |
|
12,00,000 |
NOTES TO ACCOUNTS
|
Note No. |
Particulars |
Amount (Rs) |
|
1 |
Long-Term Borrowings |
|
|
|
Bank Loan (Secured against issue Debentures of Rs 12,00,000) |
12,00,000 |
|
2 |
Cash and Cash Equivalents |
|
|
|
Cash at Bank |
12,00,000 |
Alternative Method
|
|
Debenture Suspense A/c |
Dr. |
|
15,00,000 |
|
|||
|
|
|
To 10% Debentures A/c |
|
|
15,00,000 |
|||
|
|
(Issued 15,000 10% Debentures of Rs 100 each as collateral security to bank against a loan of Rs 12,00,000) |
|
|
|
||||
X Ltd.
Balance Sheet
|
Particulars |
Note No. |
Amount (Rs) |
|
I. Equity and Liabilities |
|
|
|
1. Shareholders’ Fund |
|
|
|
2. Non-Current Liabilities |
|
|
|
a. Long-Term Borrowings |
1 |
12,00,000 |
|
3. Current Liabilities |
|
|
|
Total |
|
12,00,000 |
|
II. Assets |
|
|
|
1. Non-Current Assets |
|
|
|
2. Current Assets |
|
|
|
a. Cash and Cash Equivalents |
2 |
12,00,000 |
|
Total |
|
12,00,000 |
NOTES TO ACCOUNTS
|
Note No. |
Particulars |
Amount (Rs) |
|
|
1 |
Long Term Borrowings |
|
|
|
|
Secured: |
|
|
|
|
Bank Loan |
12,00,000 |
|
|
|
10 % Debentures (Secured against issue of Debentures of Rs 12,00,000) |
15,00,000 |
|
|
|
Less: Debenture Suspense Account |
15,00,000 |
- |
|
|
|
12,00,000 |
|
|
2 |
Cash and Cash Equivalents |
|
|
|
|
Cash at Bank |
12,00,000 |
|
(iv)
|
Machinery A/c |
Dr. |
|
13,50,000 |
|
|||
|
|
|
To Vendor A/c |
|
|
13,50,000 |
||
|
|
(Machinery purchased from vendor) |
|
|
|
|||
|
|
Vendor A/c |
Dr. |
|
13,50,000 |
|
||
|
|
Discount on Issue of Debentures A/c |
Dr. |
|
1,50,000 |
|
||
|
|
|
To 10% Debenture A/c |
|
|
15,00,000 |
||
|
|
(15,000 10% Debentures @ Rs 100 each issued at 10% discount to the vendor in consideration of Machinery of Rs 13,50,000) |
|
|
|
|||
X Ltd.
Balance Sheet
|
Particulars |
Note No. |
Amount (Rs) |
|
I. Equity and Liabilities |
|
|
|
1. Shareholders’ Funds |
|
|
|
2. Non-Current Liabilities |
|
|
|
a. Long Term Borrowings |
1 |
15,00,000 |
|
3. Current Liabilities |
|
|
|
Total |
|
15,00,000 |
|
II. Assets |
|
|
|
1. Non-Current Assets |
|
|
|
a. Fixed Assets |
|
|
|
i. Tangible Assets |
2 |
13,50,000 |
|
b. Other Non-Current Assets |
3 |
1,50,000 |
|
2. Current Assets |
|
|
|
Total |
|
15,00,000 |
NOTES TO ACCOUNTS
|
Note No. |
Particulars |
Amount (Rs) |
|
1 |
Long Term Borrowings |
|
|
|
10% Debentures (Secured) |
15,00,000 |
|
2 |
Tangible Assets |
|
|
|
Plant and Machinery |
13,50,000 |
|
3 |
Other Non-Current Assets |
|
|
|
Discount on Issue of Debentures |
1,50,000 |
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