NOTES


CA-Foundation > Principles and Practice of Accounting > Company Accounts - Issue of Debentures (Old & New)

On 1st April 2017 Sheru Ltd. issued 1,00,000 12% debentures of Rs.100 each at a discount of 5%, redeemable on 31 March 2022. Issue was oversubscribed by 20,000 debentures, who were refunded their money. Interest is paid annually on 31 March. You are required to prepare:

i) Journal Entries at the time of issue of debentures.

ii) Discount on issue of Debenture Account

iii) Interest account and Debenture holder Account assuming TDS is deducted @ 10%.



Ans.

Journal in the Books of Sheru Ltd.

Date

Particulars

L.F

(Rs.00)

(Rs.00)

2017

 

 

 

 

Apr 1

Bank A/c               Dr.

  To Debenture Application A/c

(Being debenture application money received for 1,20,000 debentures)

 

1,14,000

 

1,14,000

 

Debenture Application A/c        Dr.

Discount on Issue of Debenture A/c  Dr.

    To 12% Debenture A/c

    To Bank A/c

(Being application money transferred to debenture account and excess refunded)

 

1,14,000

5,000

 

 

1,00,000

19,000

 (ii) Discount on Issue of Debenture A/c

Date

Particulars

Rs’00

Date

Particulars

Rs’00

1.4.17

To 12% Debentures A/c

5,000

31.3.18

By Profit & Loss A/c

1,000

 

 

 

31.3.18

By Balance c/d

4,000

 

 

5,000

 

 

5,000

1.4.18

To Balance b/d

4,000

31.3.19

By Profit & Loss A/c

1,000

 

 

 

31.3.19

By Balance c/d

3,000

 

 

4,000

 

 

4,000

1.4.19

To Balance b/d

3,000

31.3.20

By Profit & Loss A/c

1,000

 

 

 

31.3.20

By Balance c/d

2,000

 

 

3,000

 

 

3,000

1.4.20

To Balance b/d

2,000

31.3.21

By Profit & Loss A/c

1,000

 

 

 

31.3.21

By Balance c/d

1,000

 

 

2,000

 

 

2,000

1.4.21

To Balance b/d

1,000

31.3.22

By Profit & Loss A/c

1,000

 

 

1,000

 

 

1,000
     (iii) Interest A/c

Date

Particulars

Rs’00

Date

Particulars

Rs’00

31.3.18

To Debentureholder A/c

12,000

31.3.18

By Profit & Loss A/c

12,000

 

 

12,000

 

 

12,000

31.3.19

To Debentureholder A/c

12,000

31.3.19

By Profit & Loss A/c

12,000

 

 

12,000

 

 

12,000

31.3.20

To Debentureholder A/c

12,000

31.3.20

By Profit & Loss A/c

12,000

 

 

12,000

 

 

12,000

31.3.21

To Debentureholder A/c

12,000

31.3.21

By Profit & Loss A/c

12,000

 

 

12,000

 

 

12,000

31.3.22

To Debentureholder A/c

12,000

31.3.22

By Profit & Loss A/c

12,000

 

 

12,000

 

 

12,000

 Debentureholder A/c

Date

Particulars

Rs’00

Date

Particulars

Rs’00

31.3.18

To Bank A/c

10,800

31.3.18

By Interest A/c

12,000

31.3.18

To TDS A/c

1,200

 

 

 

 

 

12,000

 

 

12,000

31.3.19

To Bank A/c

10,800

31.3.19

By Interest A/c

12,000

31.3.19

To TDS A/c

1,200

 

 

 

 

 

12,000

 

 

12,000

31.3.20

To Bank A/c

10,800

31.3.20

By Interest A/c

12,000

31.3.20

To TDS A/c

1,200

 

 

 

 

 

12,000

 

 

12,000

31.3.21

To Bank A/c

10,800

31.3.21

By Interest A/c

12,000

31.3.21

To TDS A/c

1,200

 

 

 

 

 

12,000

 

 

12,000

31.3.22

To Bank A/c

10,800

31.3.22

By Interest A/c

12,000

31.3.22

To TDS A/c

1,200

 

 

 

 

 

12,000

 

 

12,000

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Notes of Company Accounts - Issue of Debentures (Old & New)



  1. Distinguish between debentures and shares.


    see in detail

  2. Country Crafts Ltd. issued 1,00,000, 8% debentures of Rs.100 each at premium of 5% payable fully on application and redeemable at premium of Rs.10 Pass necessary journal entries at the time of issue.


    see in detail

  3. Koinal Chemicals Ltd. issued 20,00,000, 10% debentures of Rs.50 each at premium of 10%, payable as Rs.20 on application and balance on allotment. Debentures are redeemable at par after 6 years. All the money due on allotment was called up and received. Record necessary entries when premium money is included in allotment money
    see in detail

  4. Kapil Ltd. issued 50,000, 12% Debentures of Rs.100 each at a premium of 10% payable in full on application by 1st March, 2017. The issue was fully subscribed and debentures were allotted on 9th March, 2017. Pass necessary Journal Entries (including cash transactions).


    see in detail

  5. On 1st April 2017 Sheru Ltd. issued 1,00,000 12% debentures of Rs.100 each at a discount of 5%, redeemable on 31 March 2022. Issue was oversubscribed by 20,000 debentures, who were refunded their money. Interest is paid annually on 31 March. You are required to prepare:

    i) Journal Entries at the time of issue of debentures.

    ii) Discount on issue of Debenture Account

    iii) Interest account and Debenture holder Account assuming TDS is deducted @ 10%.


    see in detail


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