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12th | Company Accounts- Issue of Debentures| Question No.  26 To 30 | Ts Grewal Solution 2022-2023

Question 26:


Star Ltd. took over the assets of ` 6,60,000 and liabilities of ` 80,000 of Moon Ltd. for ` 6,00,000. Give necessary Journal entries in the books of Star Ltd. assuming that:
Case (a): The purchase consideration was payable 10% in cash and the balance in 5,400; 12% Debentures of 
` 100 each.
Case (b): The purchase consideration was payable 10% in cash and the balance in 4,500; 12% Debentures of 
` 100 each issued at 20% premium.

Answer:


Journal

Date

Particulars

L.F.

Debit

 (`)

Credit

 (`)

 

Assets A/c

Dr.

 

6,60,000

 

 

Goodwill A/c (Balancing Figure)

Dr.

 

20,000

 

 

     To Liabilities A/c

 

 

 

80,000

 

     To Moon Ltd.

 

 

 

6,00,000

 

(Purchase of business took over)

 

 

 

 

 

 

 

 

 

 

a.

Moon Ltd.

Dr.

 

6,00,000

 

 

  To Cash A/c

 

 

 

60,000

 

  To 12% Debentures A/c 

 

 

 

5,40,000

 

(Purchase consideration discharged)

 

 

 

 

 

 

 

 

 

 

b.

Moon Ltd.

Dr.

 

6,00,000

 

 

  To Cash A/c

 

 

 

60,000

 

  To 12% Debentures A/c 

 

 

 

4,50,000

 

  To Security Premium Reserve A/c

 

 

 

90,000

 

( Purchase consideration discharged)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Question 27:


A company took a loan of  ` 4,00,000 from Bandhan Bank Ltd. and issued  8% Debentures of  ` 4,00,000 as a collateral security.

Answer:


When Debentures Issued as Collateral Security are shown separately

 

Date

Particulars

L.F.

Debit

`

Credit

`

 

Bank A/c

Dr.

 

4,00,000

 

 

To Loan from Bandhan Bank Ltd.

 

 

4,00,000

 

(Loan taken against issuing 8% Debentures as collateral security)

 

 

 

 

 

 

 

 

 

Debenture Suspense A/c

Dr.

 

4,00,000

 

 

To 8% Debenture A/c

 

 

4,00,000

 

(Debentures issued as collateral security)

 

 

 

 

 

 

 

 

 

Posting in the Company's Balance Sheet (When Debentures Issued as Collateral Security are shown separately)

 

Balance Sheet

Particulars

Note No.

 (`)

I Equity and Liabilities

 

 

1.Shareholders’ Funds

 

 

2.Non-Current Liabilities

 

 

a. Long-Term Borrowings

1

4,00,000

3.Current Liabilities

 

 

Total

 

4,00,000

 

 

 

II Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

4,00,000

Total

 

4,00,000

 

NOTES TO ACCOUNTS

Note No.

Particulars

 (`)

 

 

 

1

Long-Term Borrowings

 

 

Secured:

 

 

Loan from Bandhan Bank (Secured by issue of  Debentures of ` 4,00,000)

4,00,000

 

8% Debentures (Issued as Collateral Security to Bank against Loan)

 

4,00,000

 

 

 

Less: Debenture Suspense Account

4,00,000

-

 

 

4,00,000

 

 

 

2

Cash and Cash Equivalents

 

 

Cash at Bank

4,00,000

 

 

 

 

Alternative Method: When debentures Issued as Collateral Security are not shown separately

 

Date

Particulars

L.F.

Debit

`

Credit

`

 

Bank A/c

Dr.

 

4,00,000

 

 

To Loan From Bandhan Bank Ltd.

 

 

4,00,000

 

(Loan taken from Bandhan Bank secured by issuing Debentures as collateral security)

 

 

 

 

 

 

 

 

 

(When Debentures Issued as Collateral Security are not shown separately)

Balance Sheet

Particulars

Note No.

 (`)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

2. Non-Current Liabilities

 

 

a. Long-Term Borrowings

1

4,00,000

3. Current Liabilities

 

 

Total

 

4,00,000

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

4,00,000

Total

 

4,00,000

 

NOTES TO ACCOUNTS

Note No.

Particulars

 (`)

 

 

 

1

Long-Term Borrowings

 

 

Secured:

 

 

Loan from Bandhan Bank (Secured by issue of  8% Debentures of ` 4,00,000 as Collateral Security)

 

4,00,000

 

 

 

2

Cash and Cash Equivalents

 

 

Cash at Bank

4,00,000

 

 

 

 

Question 28:


Best Barcode Ltd. took a loan of  ` 5,00,000 from a bank giving  ` 6,00,000; 9% Debentures as collateral security. Pass journal entries regarding issue of debentures , if any, and show this loan in the Balance Sheet of the company.

Answer:


Best Barcode Ltd.

Balance Sheet

Particulars

Note No.

 (`)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

2. Non-Current Liabilities

 

 

a. Long-Term Borrowings

1

5,00,000

3. Current Liabilities

 

 

Total

 

5,00,000

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

5,00,000

Total

 

5,00,000

 

NOTES TO ACCOUNTS

Note No.

Particulars

 (`)

 

 

 

1

Long-Term Borrowings

 

 

Loan (Secured by issue of  9% Debentures of ` 6,00,000 as Collateral Security)

 

5,00,000

 

 

 

2

Cash and Cash Equivalents

 

 

Cash at Bank

5,00,000

 

 

 

 

Date

Particulars

L.F.

Debit

`

Credit

`

 

Bank A/c

Dr.

 

5,00,000

 

 

To Loan A/c

 

 

5,00,000

 

(Loan taken against issuing 9% Debentures as collateral Security)

 

 

 

 

 

 

 

 

Alternative Method:  

Date

Particulars

L.F.

Debit

`

Credit

`

 

Bank A/c

Dr.

 

5,00,000

 

 

To Loan A/c

 

 

5,00,000

 

(Loan taken against issuing 9% debentures as collateral Security)

 

 

 

 

 

 

 

 

 

Debenture Suspense A/c

Dr.

 

6,00,000

 

 

To 9% Debentures A/c

 

 

6,00,000

 

(Issued 9% Debentures of ` 6,00,000 as collateral security)

 

 

 

 

 

 

 

 

Posting in the Company's Balance Sheet

Best Barcode Ltd.

Balance Sheet

Particulars

Note No.

 (`)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

2. Non-Current Liabilities

 

 

a. Long-Term Borrowings

1

5,00,000

3. Current Liabilities

 

 

Total

 

5,00,000

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

5,00,000

Total

 

5,00,000

 

NOTES TO ACCOUNTS

Note No.

Particulars

 (`)

 

 

 

1

Long-Term Borrowings

 

 

Secured:

 

 

Loan (Secured by issue of  9% Debentures of

` 6,00,000 as Collateral Security)

 

5,00,000

 

9% Debentures (Issued as Collateral Security to Bank against loan)

 

6,00,000

 

 

 

Less: Debenture Suspense Account

6,00,000

-

 

 

5,00,000

 

 

 

2

Cash and Cash Equivalents

 

 

Cash at Bank

5,00,000

 

 

 

 

Question 29:


X Ltd. took a loan of  ` 3,00,000 from IDBI Bank . The company issued 4,000; 9% Debentures of  ` 100 each as a collateral security for the same . Show how these items will be presented in the Balance Sheet of the company. (AI 2010)

Answer:


When Debentures Issued as Collateral Security is shown separately

X Ltd.

Balance Sheet

Particulars

Note No.

 (`)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

2. Non-Current Liabilities

 

 

a. Long-Term Borrowings

1

3,00,000

3. Current Liabilities

 

 

Total

 

3,00,000

 

 

 

II. Assets

 

 

1.Non-Current Assets

 

 

2.Current Assets

 

 

a. Cash and Cash Equivalents

2

3,00,000

Total

 

3,00,000

 

NOTES TO ACCOUNTS

Note No.

Particulars

 (`)

 

 

 

1

Long-Term Borrowings

 

 

Secured:

 

 

Loan  From IDBI(Secured by issue of  Debentures of ` 4,00,000)

3,00,000

 

9 % Debentures (Issued as Collateral Security against loan)

 

4,00,000

 

 

 

Less: Debenture Suspense Account

4,00,000

-

 

 

3,00,000

 

 

 

2

Cash and Cash Equivalents

 

 

Cash at Bank

3,00,000

 

 

 

 

Alternative Method: When Debentures Issued as Collateral Security are not shown separately

X Ltd.

Balance Sheet

Particulars

Note No.

 (`)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

2. Non-Current Liabilities

 

 

a. Long-Term Borrowings

1

3,00,000

3.Current Liabilities

 

 

Total

 

3,00,000

 

 

 

II. Assets

 

 

1. Non-Current Assets

 

 

2. Current Assets

 

 

a. Cash and Cash Equivalents

2

3,00,000

Total

 

3,00,000

 

NOTES TO ACCOUNTS

Note No.

Particulars

 (`)

 

 

 

1

Long-Term Borrowings

 

 

Secured:

 

 

Loan From IDBI (Secured by issue of  9% Debentures of ` 4,00,000 as Collateral Security)

 

3,00,000

 

 

 

2

Cash and Cash Equivalents

 

 

Cash at Bank

3,00,000

 

 

 

 

Question 30:


S. Singh Limited obtained a loan of ` 5,00,000 from State Bank of India @ 10% p.a. interest. The company issued ` 7,50,000, 10% Debentures of ` 100 each in favour of State Bank of India as Collateral Security. Pass necessary Journal entries for the above transactions:
(i) When company decided not to record the issue of 10% Debentures as Collateral Security.
(ii) When company decided to record the issue of 10% Debentures as Collateral Security.  (Sample Paper 2018-19)

Answer:


(i) When company decided not to record the issue of 10% debentures as Collateral Security

In the books of S. Singh Ltd.

Journal

Date

Particulars

 

L.F.

Debit
(
`)

Credit
(
`)

 

Bank A/c

Dr.

 

5,00,000

 

 

  To Bank Loan A/c

 

 

 

5,00,000

 

(Being bank loan taken from State Bank of India @10% p.a. interest)

 

 

 

 

(ii) When company decided to record the issue of 10% debentures as Collateral Security

In the books of S. Singh Ltd.

Journal

Date

Particulars

 

L.F.

Debit

(`)

Credit

(`)

 

Bank A/c

Dr.

 

5,00,000

 

 

  To Bank Loan A/c

 

 

 

5,00,000

 

(Being bank loan taken from State Bank of India @10% p.a. interest)

 

 

 

 

 

 

 

 

 

 

 

Debentures Suspense A/c

Dr.

 

7,50,000

 

 

  To 10% Debentures A/c

 

 

 

7,50,000

 

(Being 7,500, 10% Debentures issued as collateral security)

 

 

 

 

 

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