Question 26:
Grown
Ltd. issued 500, 10% Debentures of `
1,000 each credited as fully paid-up to the promoters for their services to
incorporate the company. It also issued 100, 10% Debentures of ` 1,000 each credited as fully paid-up to the
underwriters towards their commission. Pass the Journal entries.
Answer:
|
In the books of Grown Ltd. Journal |
|||||
|
Date |
Particulars |
|
L.F. |
Debit |
Credit |
|
|
Incorporation
Expenses A/c |
Dr. |
|
5,00,000 |
|
|
|
To Promoters A/c |
|
|
|
5,00,000 |
|
|
(Being
amount due to promoters for their services) |
|
|
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|
|
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|
|
|
|
|
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|
Promoters
A/c |
Dr. |
|
5,00,000 |
|
|
|
To 10% Debentures A/c (500 × 1,000) |
|
|
|
5,00,000 |
|
|
(Being
500, 10% debentures issued as purchase consideration) |
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Underwriting
Commission A/c |
Dr. |
|
1,00,000 |
|
|
|
To Underwriters A/c |
|
|
|
1,00,000 |
|
|
(Being
amount due to underwriters for their services) |
|
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Underwriters
A/c |
Dr. |
|
1,00,000 |
|
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|
To 10% Debentures A/c (100 × 1,000) |
|
|
|
1,00,000 |
|
|
(Being
100, 10% debentures issued as purchase consideration) |
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Statement
of Profit and Loss A/c |
Dr. |
|
6,00,000 |
|
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|
To Incorporation Expenses A/c |
|
|
|
5,00,000 |
|
|
To Underwriting Commission A/c |
|
|
|
1,00,000 |
|
|
(Being
expenses transferred to statement of profit and loss at the end of year) |
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Question 27:
Bright
Ltd. took over the assets of `
6,60,000 and liabilities of ` 80,000 of Star Ltd. for an agreed purchase
consideration of ` 6,00,000 payable 10% in cash and the balance by the
issue of 12% Debentures of `
100 each. Give necessary Journal entries in the books of Bright Ltd., assuming
that:
Case (a): The debentures are issued at par.
Case (b): The debentures are issued at 20% premium.
Case (c): The debentures are issued at 10% discount.
Answer:
|
Books
of Bright Ltd. |
|||||
|
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
Star Ltd. |
|
|
|
6,00,000 |
|
|
(Purchase of business of Star Ltd.) |
|
|
|
|
|
|
|
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|
60,000 |
|
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|
Star Ltd. |
Dr. |
|
|
60,000 |
|
|
To Cash A/c |
|
|
|
|
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|
(Payment made in cash) |
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(a) |
Star Ltd. |
Dr. |
|
5,40,000 |
|
|
|
To 12% Debentures A/c |
|
|
|
5,40,000 |
|
|
( Purchase consideration discharged
by issue of 12% Debentures) |
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(b) |
Star Ltd. |
Dr. |
|
5,40,000 |
|
|
|
To 12% Debentures A/c |
|
|
|
4,50,000 |
|
|
To Security Premium Reserve
A/c |
|
|
|
90,000 |
|
|
( Purchase consideration discharged
by issue of 12% Debentures) |
|
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|
|
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(c) |
Star Ltd. |
Dr. |
|
5,40,000 |
|
|
|
Discount on Issue of Debentures A/c |
Dr. |
|
60,000 |
|
|
|
To 12% Debentures A/c |
|
|
|
6,00,000 |
|
|
( Purchase consideration discharged
by issue of 12% Debentures) |
|
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Working Note:
1) Number of Debentures to issued=5,40,000/120=4,500 Debentures
2) Number of Debentures to issued=5,40,000/90=6,000 Debentures
Question 28:
Star
Ltd. took over the assets of `
6,60,000 and liabilities of ` 80,000 ofMoon Ltd.
for ` 6,00,000. Give necessary Journal entries in the books
of Star Ltd. assuming that:
Case (1): The purchase consideration was payable 10% in cash
and the balance in 5,400; 12% Debentures of ` 100 each.
Case (2): 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) |
|
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|
a. |
Moon Ltd. |
Dr. |
|
6,00,000 |
|
|
|
To Cash A/c |
|
|
|
60,000 |
|
|
To 12% Debentures A/c |
|
|
|
5,40,000 |
|
|
(Purchase consideration discharged) |
|
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|
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|
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) |
|
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Question 29:
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) |
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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 DebenturesIssued
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 |
|
|
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|
Question 30:
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 |
|
|
|
|
|
|
Ts Grewal Solution 2024-2025
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Class 12 / Volume – 2