12th | Company Accounts- Issue of Debentures| Question No. 41 To 45 | Ts Grewal Solution 2022-2023

Question 41:

Mercury limited company issued `1,00,000, 9% Debentures at a discount of 6% on 1st April, 2022. These debentures are to be redeemed equally, spread over 5 annual installments.

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

Answer:

In the books of S. Singh Ltd. Journal
Date	Particulars		L.F.	Debit (`)	Credit (`)
2022
April 01	Bank A/c	Dr.		94,000
	To Debentures Application & Allotment A/c				94,000
	(Being application money received on 9% Debentures issued at 6% discount)

April 01	Debentures Application & Allotment A/c	Dr.		94,000
	Discount on Issue of Debentures A/c	Dr.		6,000
	To 9% Debentures A/c				1,00,000
	(Being application & allotment money adjusted)
2023
March 31	Statement of Profit & Loss A/c	Dr.		6,000
	To Discount on Issue of Debentures A/c				6,000
	(Being discount on issue of debentures written off)

Question 42: Gladiators Ltd. issued 10,000; 8% Debentures of ` 100 each at a discount of 5%, redeemable at a premium of 5% payable along with application. It had balance of ` 70,000 in Securities Premium Reserve and ` 50,000 in Capital Reserve. The debentures were fully subscribed and amounts were duly received.

Pass the necessary Journal entries for issue of debentures and writing off Loss on Issue of Debentures.

Answer:

Books of Gladiators Ltd.
Journal
Date	Particular		L.F.	Debit `	Credit `
	Bank A/c	Dr.		9,50,000
	To Debenture Application A/c				9,50,000
	(Being Application Money received for 10,000 debenture for `95)
	Debenture Application A/c Dr.			9,50,000
	Discount on issue of Debenture A/c Dr.			50,000
	Loss on Redemption on Debenture A/c Dr.			50,000
	To 8% Debenture A/c				10,00,000
	To Premium on redemption of debenture A/c				50,000
	(Being issued 10,000; 8% Debentures of ` 100 each at a discount of 5%, redeemable at a premium of 5% payable along with application)
	Securities Premium Reserve A/c Dr.			70,000
	Capital Reserve A/c Dr.			30,000
	To Discount on issue of Debenture A/c				50,000
	To Loss on Redemption on Debenture A/c				50,000
	(Being Discount on issue of Debenture and Loss on Redemption on Debenture written off)

Question 43: DB Ltd. issued 20,000; 7% Debentures of ` 100 each at a discount of 10% redeemable at a premium of 10% payable ` 50 on application and balance on allotment. It had balance in Securities Premium Reserve of `1,50,000 and in Capital Reserve of `1,00,000.

The debentures were fully subscribed and amounts were duly received.

Pass the Journal entries for issue of Debentures and writing off loss on Issue of Debentures.

Answer:

Books of DB Ltd.
Journal
Date	Particular		L.F.	Debit `	Credit `
	Bank A/c	Dr.		18,00,000
	To Debenture Application A/c				18,00,000
	(Being Application Money received for 20,000 debenture for `90)
	Debenture Application A/c Dr.			18,00,000
	Discount on issue of Debenture A/c Dr.			2,00,000
	Loss on Redemption on Debenture A/c Dr.			2,00,000
	To 7% Debenture A/c				20,00,000
	To Premium on redemption of debenture A/c				2,00,000
	(Being issued 20,000; 7% Debentures of ` 100 each at a discount of 10%, redeemable at a premium of 10% payable along with application)
	Securities Premium Reserve A/c Dr.			1,50,000
	Capital Reserve A/c Dr.			1,00,000
	Statement of Profit and loss A/c Dr.			1,50,000
	To Discount on issue of Debenture A/c				2,00,000
	To Loss on Redemption on Debenture A/c				2,00,000
	(Being Discount on issue of Debenture and Loss on Redemption on Debenture written off)

Question 44: On 1st January, 2018, Raha Ltd. issued 6,000, 8% Debentures of nominal (face) value of ` 100 each redeemable at 5% premium in equal proportions at the end of 5, 10 and 15 years. It has a balance of ` 10,000 in Securities Premium Reserve.

Pass Journal entries. Also give Journal entries for writing off Loss on Issue of Debentures.

Answer:

Books of Raha Ltd.
Journal
Date	Particular		L.F.	Debit `	Credit `
2018 1st January	Bank A/c	Dr.		6,00,000
	To Debenture Application A/c				6,00,000
	(Being Application Money received for 6,000 debenture for `100)
	Debenture Application A/c Dr.			6,00,000
	Loss on Redemption on Debenture A/c Dr.			30,000
	To 8% Debenture A/c				6,00,000
	To Premium on redemption of debenture A/c				30,000
	(Being issued 6,000; 8% Debentures of ` 100 each, redeemable at a premium of 5% payable along with application)
2018 31 March	Securities Premium Reserve A/c Dr.			10,000
	Statement of Profit and loss A/c Dr.			20,000
	To Loss on Redemption on Debenture A/c				30,000
	(Being Discount on issue of Debenture and Loss on Redemption on Debenture written off)

Question 45:

Global Ltd. issued 10,000, 8% Debentures of ` 100 each redeemable in four equal instalments by draw of lots from the end of 3 years at a premium of ` 9.
Pass the Journal entries for writing off the Loss on Issue of Debentures. Also prepare Loss on issue of Debentures Account.

Answer:

In the books of Raha Ltd. Journal
Date	Particulars		L.F.	Debit (`)	Credit (`)
By the end of year of Allotment	Statement of Profit & Loss A/c	Dr.		90,000
	To Loss on Issue of Debentures A/c				90,000
	(Being loss on issue of debentures written off)

Dr.	Loss on Issue of Debentures A/c						Cr.
Date		Particulars	(`)	Date	Particulars	(`)
On the date of Issue		To 8% Debentures A/c	90,000	By the end of Year of allotment	By Statement of Profit & Loss A/c	90,000

			90,000			90,000