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Question
Youth Ltd. took a loan of ₹ 15,00,000 from State Bank of India against the security of tangible assets. In addition to principal security, it issued 10,000 11% debentures of ₹ 100 each as collateral security.
Pass necessary journal entries for the above transactions, if the company decided to record the issue of 11% debentures as collateral security and show the presentation in the Balance Sheet of Youth Ltd.
Solution
| In the Books of Youth Ltd. Journal | ||||
| Date | Particulars | L.F. | Dr. Amount(₹) | Cr. Amount(₹) |
| Bank A/c Dr. | 15,00,000 | |||
|
To Bank Loan A/c (Being Loan taken from State Bank of India) |
15,00,000 | |||
| Debenture Suspense A/c Dr. | 10,00,000 | |||
|
To 11% Debentures A/c (Being 11% debentures deposited as collateral security) |
10,00,000 | |||
| Balance sheet of Youth Ltd. (An extract) | ||
| Particulars | Note No | Amount (₹) |
| I. Equity and Liabilities | ||
| 1. Non-current Liabilities | ||
| Long term borrowings | 1 | 15,00,000 |
Notes to Accounts:1
| Particulars | Amount (₹) | |
| I. Long term borrowings | ||
| Secured Loan from State Bank of India | 15,00,000 | |
| 10,000, 11% debentures of ₹100 each | 10,00,000 | |
| Less: - Debenture Suspense | 10,00,000 | NIL |
| (deposited as collateral security) | 15,00,000 | |
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RELATED QUESTIONS
Following is the Receipt and Payment Account of Indian Sports Club, prepared Income and Expenditure Account, Balance Sheet as on December 31, 2017:
Receipt and Payment Account
for the year ending December 31, 2017
| Receipts | Amount (Rs) | Payments | Amount (Rs) |
| Balance b/d | 7,890 | Salary | 11,000 |
| Subscriptions | 52,000 | Electric charges | 5,500 |
| Life member ship fee | 2,200 | Billiard Table | 17,500 |
| Entrance fee |
3,200 |
Office expenses | 4,100 |
| Tournament fund | 26,000 | Printing and Stationery | 2,300 |
| Locker Rent | 1,250 | Tournament expenses | 18,500 |
| Sale of old sports goods (Costing Rs 2,200) | 2,500 | Repair of ground | 2,000 |
| Sale of Old Newspaper |
750 |
Furniture purchased | 7,700 |
| Legacy |
37,500 |
Sports equipments | 12,000 |
| Cash in Hand | 12,690 | ||
| Cash at Bank | 10,000 | ||
| Fixed Deposit (on 1.10.17 for 10% p.a) | 30,000 | ||
| 133290 | 133290 |
Other Information:
Subscription outstanding was on December 31, 2016 Rs 1,200 and Rs 3,200 on December 31, 2017. Locker rent outstanding on December 31, 2017 Rs 250. Salary outstanding on December 31, 2017 Rs 1,000.
On January 1, 2017, club has Building Rs 36,000, furniture Rs 12,000, Sports equipments Rs 17,500. Depreciation charged on these items @ 10% (including Purchase).
How are the following items shown in the accounts of a Not-for-Profit Organisation ?
| Rs. | |
| Tournament Fund | 50,000 |
| Tournament Expenses | 15,000 |
| Receipts from Tournament | 20,000 |
How are the following dealt with in the accounts of a Not-for-Profit Organisation ?
|
Case I
|
Dr. (₹)
|
Cr.(₹) |
Case II
|
Dr. (₹) | Cr. (₹) |
| Prize Fund Prizes Paid Match Expenses |
12,000
15,000 |
50,000 | Match Fund Match Expenses Investments of Match Fund Interest on Match Fund Investments Prizes Paid |
35,000 60,000 19,000 |
1,00,000 3,000 |
How are the following dealt with while preparing the final accounts of a club?
| TRIAL BALANCE as at 31st March, 2019 |
||
| Particulars |
Dr.(₹)
|
Cr. (₹) |
| Match Fund | ........ | 80,000 |
| Match Fund Investments | 72,000 | ......... |
| Match Fund Bank Balance | 35,000 | ....... |
| Interest on Match Fund Investments | ......... | 2880 |
| Match Expenses | 5,500 | ......... |
Show how are the following items dealt with while preparing the final accounts for the year ended 31st March, 2019 of a Not-for-profit Organisation:
Case I
Expenditure on construction of Pavilion is ₹ 6,00,000. The construction work is in progress and has not yet completed. Capital Fund as at 31st March, 2018 is ₹ 20,00,000.
Case II
Expenditure on construction of Pavilion is ₹ 6,00,000. The construction work is in progress and has not yet completed. Pavilion Fund as at 31st March, 2018 is ₹ 10,00,000 and Capital Fund as at 31st March, 2018 is ₹ 20,00,000.
Case III
Expenditure on construction of Pavilion is ₹ 6,00,000. The construction work is in progress and has not yet completed. Pavilion Fund as at 31st March, 2018 is ₹ 10,00,000, and Capital Fund as at 31st March, 2018 is ₹ 20,00,000. Donation Received for Pavilion on 1st January, 2019 is ₹ 5,00,000.
How are the following dealt with while preparing the final accounts for the year ended 31st , 2019?
| RECEIPTS AND PAYMENTS ACCOUNT (AN EXTRACT) for the year ended 31st March, 2019 |
||||
| Dr. | Cr. | |||
| Receipts | ₹ | Payments | ₹ | |
| By Payments for Sports Material | 1,40,000 | |||
| BALANCE SHEET (AN EXTRACT) as at 1st April, 2018 |
||||
|
Liabilities |
₹ |
Assets |
₹ | |
| Creditors for Sports Materials | 6,000 | Sports Materials | 8,000 | |
Additional information :
Sports Materials in Hand on 31st March, 2019 – ₹ 22,000.
From the following information of a Not-for-Profit Organisation, show the 'Sports Materials' item in the Income and Expenditure Account for the year ended 31st March, 2019 and Balance Sheets as at 31st March, 2018 and 31st March, 2019:
| Particulars | 31st March, 2018 ₹ |
31st March, 2019 ₹ |
| Stocks of Sports Materials | 6,200 | 4,800 |
| Creditors for Sports Materials | 9,800 | 7,200 |
| Advance to Suppliers for Sports Materials | 11,000 | 19,000 |
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