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12th | Company Accounts- Issue of Debentures| Question No.  36 To 40 | Ts Grewal Solution 2022-2023

Question 36:   Care Cosmetics Ltd. issued 50,000; 9%6 Debentures of ` 10 each on 1st April, 2021 redeemable at a premium of 10% after 10 years. According to the terms of issue, ` 4 is payable on application and balance on allotment of debentures. Record necessary Journal entries regarding issue of debentures.


Answer:


Books of Care Cosmetics Ltd.

 

Journal

 

Date

Particular

L.F.

Debit

`

Credit

`

 

 1-4-2021

Bank A/c

Dr.

 

2,00,000

 

 

 

 To Debenture Application A/c

 

 

2,00,000

 

 

(Being Application Money received for 50,000 debenture for `4)

 

 

 

 

 1-4-2021

Debenture Application A/c              Dr.

 

2,00,000

 

 

 

 To 9% Debenture A/c

 

 

2,00,000

 

 

(Being interest paid)

 

 

 

 

 1-4-2021

Debenture Allotment A/c                 Dr.

 

3,00,000

 

 

 

Loss on Redemption on Debenture A/c                                                 Dr.

 

30,000

 

 

 

 To 9% Debenture A/c

 

 

3,00,000

 

 

 To Premium on redemption of debenture A/c

 

 

30,000

 

 

(Being interest allowed on debenture)

 

 

 

 

 

 

 

 

 

 

Question 37:   Agam Ltd. issued 40,000; 9% Debentures of ` 100 each on 1st April, 2021 at a discount of 10% redeemable at a premium of 10%. Assuming that the interest was paid half yearly on 30th September and 31st March, give Journal entries relating to debenture interest for the half year ended 31st March, 2022.


Answer:


Books of Agam Ltd.

 

Journal

 

Date

Particular

L.F.

Debit

`

Credit

`

 

 1-9-2021

Debenture Interest A/c

Dr.

 

1,80,000

 

 

 

 To Debenture Holders’ A/c

 

 

1,80,000

 

 

(Being interest allowed on debenture)

 

 

 

 

 1-9-2021

Debenture Holders’ A/c                   Dr.

 

1,80,000

 

 

 

 To Bank A/c

 

 

1,80,000

 

 

(Being interest paid)

 

 

 

 

31-3-2022

Debenture Interest A/c                     Dr.

 

1,80,000

 

 

 To Debenture Holders’ A/c

 

 

1,80,000

 

 

(Being interest allowed on debenture)

 

 

 

 

31-3-2022

Debenture Holders’ A/c                   Dr.

 

1,80,000

 

 

 To Bank A/c

 

 

1,80,000

 

 

(Being interest paid)

 

 

 

 

31-3-2022

Statement of P&L A/c                     Dr.

 

3,60,000

 

 

 

  To Debenture Interest A/c

 

 

3,60,000

 

 

(Being Debenture Interest transferred to Statement P&L)

 

 

 

 

 

 

 

 

 

 

Question 38:


Bright Ltd. issued 5,000; 10% Debentures of ` 100 each on 1st April, 2021 . The issue was fully subscribed. According to the terms of issue, interest on the debentures is payable half-yearly on 30th September and 31st March and the tax deducted at source is 10%.
Pass necessary journal entries related to the debenture interest for the year ending 31st March, 2022 and transfer of interest on debentures of the year to the Statement of Profit and Loss.

Answer:


Journal

In the books of Bright Ltd.

Date

Particulars

L.F.

Debit

 (`)

Credit

 (`)

2022

 

 

 

 

 

Mar. 31

Debentures Interest A/c

Dr.

 

25,000

 

 

            To Debenture Holder’s A/c

 

 

 

22,500

 

            To Income Tax Payable A/c

 

 

 

2,500

 

(Debentures interest due)

 

 

 

 

 

 

 

 

 

 

 

Debenture Holder’s A/c

Dr.

 

22,500

 

 

Income Tax Payable A/c

 

 

2,500

 

 

To Bank A/c

 

 

 

25,000

 

(Interest on debentures paid)

 

 

 

 

 

 

 

 

 

 

Mar. 31

Statement of Profit & Loss A/c

Dr.

 

50,000

 

 

            To Debentures Interest A/c

 

 

 

50,000

 

(Interest transferred to profit and loss)

 

 

 

 

 

 

 

 

 

 

Question 39:


On 1st April, 2020,V.V.L.Ltd issued 1,000, 9% Debentures of  ` 100 each at a  discount of 6%, redeemable at a premium of 10% after three years. Pass necessary journal entries for the issue of debentures and debenture interest for the year ended 31st March, 2021, assuming that interest is payable on 30th September and 31st March and the rate of tax deducted at source is 10%. The company closes its books on 31st March every year.

Answer:


Journal

Date

Particulars

L.F.

Debit

 (`)

Credit

 (`)

2020

 

 

 

 

 

Apr. 01

Bank A/c

Dr.

 

94,000

 

 

  To Debenture Application and Allotment A/c

 

 

 

94,000

 

(Money received on the issue of debentures)

 

 

 

 

 

 

 

 

 

 

 

Debenture Application and Allotment A/c

Dr.

 

94,000

 

 

Loss on Issue of Debentures A/c

Dr.

 

16,000

 

 

  To 9% Debentures A/c

 

 

 

1,00,000

 

  To Premium on Redemption of Debentures A/c

 

 

 

10,000

 

(Debenture application and allotment money transferred to Debentures A/c)

 

 

 

 

 

 

 

 

 

 

Sept 30

Debenture Interest A/c

Dr.

 

4,500

 

 

  To Debenture holders’ A/c

 

 

 

4,050

 

  To TDS Payable A/c

 

 

 

450

 

(Interest due)

 

 

 

 

 

 

 

 

 

 

 

Debenture holders’ A/c

Dr.

 

4,050

 

 

  To Bank A/c

 

 

 

4,050

 

(Payment of interest)

 

 

 

 

 

 

 

 

 

 

 

TDS Payable A/c

Dr.

 

450

 

 

  To Bank A/c

 

 

 

450

 

(Payment of tax)

 

 

 

 

2021

 

 

 

 

 

Mar 31

Debenture Interest A/c

Dr.

 

4,500

 

 

  To Debenture holders’ A/c

 

 

 

4,050

 

  To TDS Payable A/c

 

 

 

450

 

(Interest due)

 

 

 

 

 

 

 

 

 

 

 

Debenture holders’ A/c

Dr.

 

4,050

 

 

  To Bank A/c

 

 

 

4,050

 

(Payment of interest)

 

 

 

 

 

 

 

 

 

 

 

TDS Payable A/c

Dr.

 

450

 

 

  To Bank A/c

 

 

 

450

 

(Payment of tax)

 

 

 

 

 

Question 40:


Kitply Ltd. issued T2,00,000, 10% Debentures at a discount of 5%. The terms of issue provide the repayment

at the end of 4 years. Kitply Ltd. has a balance of 5,00,000 in Securities Premium Reserve.

Pass the Journal entries for issue of debentures and writing off the discount.

Answer:


In the books of Kitply Ltd.

Journal

Date

Particulars

L.F.

Debit

`

Credit

`

1 April

Bank A/c

Dr.

 

1,90,000

 

To 10% Debenture Application A/c

 

 

1,90,000

 

(Debenture application money received at 5% discount)

 

 

 

 

 

 

 

 

 1 April

10% Debenture Application A/c

Dr.

 

1,90,000

 

 

Discount on Issue of Debentures A/c

Dr.

 

10,000

 

 

To 10% Debentures A/c

 

 

1,00,000

 

(Debenture of  ` 2,00,000 issued at 5% Discount with the term payable at 10% premium)

 

 

 

 

 

 

 

 

31March

Securities premium reserve A/c              Dr.

10,000

  To Discount on Issue of Debentures A/c

10,000

(Discount written-off)

 

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