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12th | Company Accounts- Issue of Debentures| Question No.  46 To 49 | Ts Grewal Solution 2022-2023

Question 46:


Garvit Ltd. invited applications for issuing 3,000, 11% Debentures of 100 each at a discount of 6%. The full amount was payable on application. Applications were received for 3,600 debentures. Applications for 600 debentures were rejected and the application money was refunded. Debentures were allotted to the remaining applicants.

Pass the necessary Journal entries for the above transactions, including writing off the Discount on Issue of Debentures, in the books of Garvit Ltd.

Answer:


 

In the books of Garvit Ltd.

Journal

Date

Particulars

 

L.F.

Debit
(
`)

Credit
(
`)

2018

 

 

 

 

 

April 01

Bank A/c (3,600 × 94)

Dr.

 

3,38,400

 

 

  To Debentures Application & Allotment A/c  (3,600 × 94)

 

 

 

3,38,400

 

(Being application money received on 11% Debentures issued at 6%)

 

 

 

 

 

 

 

 

 

 

April 01

Debentures Application & Allotment A/c

Dr.

 

3,38,400

 

 

Discount on Issue of Debentures A/c (3,000×4)

Dr.

 

18,000

 

 

  To 11% Debentures A/c (3,000×100)

 

 

 

3,00,000

  To Bank A/c (600×94)

56,400

 

(Being application & allotment money adjusted)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 31 March 19

Securities Premium Reserve A/c

Dr.

 

10,000

 

 

Statement of Profit & Loss A/c

   Dr.

20,000

 

 

  To Loss on Issue of Debentures A/c

 

 

 

30,000

 

(Being loss on issue of debentures written off)

 

 

 

 

 

Question 47:


On 1st June, 2021, R Energy Ltd. issued 10,000, 7% Debentures of  ` 100 each at a discount of 10% redeemable at a premium of 10% at the end of five years. All the debentures were subscribed and allotment was made.

Prepare the Balance Sheet (extract) as at 31st March, 2022.

Answer:


In the books of R Energy Ltd.

An Extract of Balance Sheet

As at 31st March, 2022

Particulars

Note No.

(`)

I. EQUITIES AND LIABILITIES

 

 

   1. Shareholders’ Funds

 

 

       Reserves and Surplus

3

(2,00,000)

  2. Non-Current Liabilities

 

 

      a. Long-term Borrowings

1

10,00,000

      b. Other long-term Liabilities

2

1,00,000

 

 

 

Total

 

9,00,000

 

 

 

II. Assets

 

 

    Current Assets

 

 

    Cash and Cash Equivalents

4

9,00,000

 

 

 

Total

 

9,00,000

  Notes to Accounts:

Note
No.

Particulars

 

 (`)

1.

Long-term Borrowings

 

 

 

10,000, 7% Debentures of `100 each issued at

 

10,00,000

 

 

 

 

2.

Other long-term Liabilities

 

 

 

Premium on Redemption of Debentures

 

1,00,000

 

 

 

 

3.

Reserves and Surplus

 

 

 

Statement of Profit & Loss

 

 

 

  Less: Loss on Issue of Debentures written off

(2,00,000)

(2,00,000)

 

 

 

 

4.

Cash and Cash Equivalents

 

 

On 7% debentures @ ` 90 each (10,000 × 90)

9,00,000

 

Question 48:


On 1st April, 2021, Solar Power Ltd. issued 10,000, 8% Debentures of ` 100 each at a discount of 5% redeemable at a premium of 15% at the end of five years. All the debentures were subscribed and allotment was made. The company had balance in Securities Premium Reserve of ` 80,000.
Prepare the Balance Sheet (extract) as at 31st March, 2022.

Answer:


In the books of Solar Power Ltd.

An Extract of Balance Sheet

As at 31st March, 2022

Particulars

Note
No.

(`)

I. EQUITIES AND LIABILITIES

 

 

   1. Shareholders’ Funds

 

 

       Reserves and Surplus

3

(1,20,000)

   2. Non-Current Liabilities

 

 

       a. Long-term Borrowings

1

10,00,000

       b. Other long-term Liabilities

2

1,50,000

 Total

 

 

 

 

 

II. Assets

 

 

    Current Assets

 

 

    Cash and Cash Equivalents

4

9,50,000

 

 

 

  Total

 

 

         

Notes to Accounts:

Note
No.

Particulars

(`)

1.

Long-term Borrowings

 

 

 

10,000, 8% Debentures of `100 each issued

 

10,00,000

 

 

 

 

2.

Other long-term Liabilities

 

 

 

Premium on Redemption of Debentures

 

1,50,000

 

 

 

 

3.

Reserves and Surplus

 

 

 

Securities Premium Reserve

80,000

 

 

  Less: Loss on Issue of Debentures written off

(80,000)

 

 

Statement of Profit and Loss

 

 

  Less: Loss on Issue of Debentures written off

(1,20,000)

(1,20,000)

 

 

 

 

4.

Cash and Cash Equivalents

 

 

 

On 8% debentures @ ` 95 each (10,000 × 95)

 

9,50,000

 

Question 49: On 1st April, 2018. Mathew Ltd. issued 10,000, 9% Debentures of ` 100 each at a discount of 5%, redeemable at a premium of 5%. These debentures were redeemable as follows:


On 31st March, 2019

2,000 Debentures;

On 31st March, 2020

5,000 Debentures;

On 31st March, 2021

3,000 Debentures.

Prepare the Loss on Issue of Debentures Account, Debentures Account and Premium on Redemption of Debentures Account for three years.

Answer:


 

In the books of Mathew Ltd.

 

Dr.

Loss on Issue of Debentures A/c

Cr.

Date

Particulars

 (`)

Date

Particulars

 (`)

2018

 

 

2019

 

 

April 01

To 9% Debentures A/c        

1,00,000

March 31

By Statement of Profit & Loss A/c

1,00,000

 

 

 

 

 

 

 

 

1,00,000

 

 

1,00,000

 

 

 

 

 

 

 

Dr.

9% Debentures A/c

Cr.

Date

Particulars

 (`)

Date

Particulars

 (`)

2019

 

 

2018

 

 

March 31

To Debentureholder’s  A/c

2,00,000

April 01

By Debenture Application & Allotment A/c

9,50,000

March 31

To balance c/d

8,00,000

April 01

By Loss on Issue of Debentures A/c

50,000

 

 

 

 

 

 

 

 

10,00,000

 

 

10,00,000

2020

 

 

2019

 

 

March 31

To Debentureholder’s  A/c

5,00,000

April 01

By balance b/d

8,00,000

March 31

To balance c/d

3,00,000

 

 

 

 

 

 

 

 

 

 

 

8,00,000

 

 

8,00,000

2021

 

 

2020

 

 

March 31

To Debentureholder’s  A/c

3,00,000

April 01

By balance b/d

3,00,000

 

 

 

 

 

 

 

 

3,00,000

 

 

3,00,000

 

 

 

 

 

 

 

Dr.

Premium on Redemption of Debentures A/c

Cr.

Date

Particulars

 (`)

Date

Particulars

 (`)

2019

 

 

2018

 

 

March 31

To Debentureholder’s  A/c       

10,000

April 01

By Loss on Issue of Debentures A/c

50,000

March 31

To balance c/d

40,000

 

 

 

 

 

 

 

 

 

 

 

50,000

 

 

50,000

2020

 

 

2019

 

 

March 31

To Debentureholder’s  A/c

25,000

April 01

By balance b/d

40,000

March 31

To balance c/d

15,000

 

 

 

 

 

 

 

 

 

 

 

40,000

 

 

40,000

2021

 

 

2020

 

 

March 31

To Debentureholder’s  A/c

15,000

April 01

By balance b/d

15,000

 

 

 

 

 

 

 

 

15,000

 

 

15,000

 

 

 

 

 

 

 

 

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