pass necessary journal entry of issue of debentures for the following i jain ltd issued 750 12% debentures of 100 - Accountancy - Issue and Redemption of Debentures

Question

pass necessary journal entry of issue of debentures for the
following
i jain ltd issued 750 12% debentures of 100 each at a discount
of 10% redeemable at a premium of 5%
ii sohan ltd issued 800 9% debentures of 100 each at a premium
of 20 percent debentures redeemable at a pemium of 10 per debenture
with working note and explaination

Nikhil Sehgal · Accepted Answer

Journal

Date

Particulars

L
F

Debit

Amount

(Rs)

Credit

Amount

(Rs)

Case
1

Bank
A/c

Dr

67,500

To
Debenture Application A/c

67,500

(Debenture
Application money received)

Debenture
Application A/c

Dr

67,500

Discount
on Issue of Debentures A/c*

Dr

7,500

Loss
on Issue of Debentures A/c*

Dr

3,750

To 12%
Debentures A/c

75,000

To
Premium on Redemption of Deb A/c

3,750

(Debentures
issued at discount redeemable at premium)

Case
2

Bank
A/c (80,000+16,000)

Dr

96,000

To
Debenture Application A/c

96,000

(Debenture
Application money received)

Debenture
Application A/c

Dr

96,000

Loss
on Issue of Debentures A/c

Dr

8,000

To 9%
Debentures A/c

80,000

To
Securities Premium Reserve A/c

16,000

To
Premium on Redemption of Deb A/c

8,000

(Debentures
issued at 20% premium and redeemable at 10% premium)

*Note: Alternatively, the discount on issue and loss on issue in
case debentures are issued at discount and redeemable at premium
can be combined and transferred to Loss on Issue of Debentures
A/c

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
Case 1	Bank A/c	Dr.		67,500
	To Debenture Application A/c				67,500
	(Debenture Application money received)

	Debenture Application A/c	Dr.		67,500
	Discount on Issue of Debentures A/c*	Dr.		7,500
	Loss on Issue of Debentures A/c*	Dr.		3,750
	To 12% Debentures A/c				75,000
	To Premium on Redemption of Deb. A/c				3,750
	(Debentures issued at discount redeemable at premium)


Case 2	Bank A/c (80,000+16,000)	Dr.		96,000
	To Debenture Application A/c				96,000
	(Debenture Application money received)

	Debenture Application A/c	Dr.		96,000
	Loss on Issue of Debentures A/c	Dr.		8,000
	To 9% Debentures A/c				80,000
	To Securities Premium Reserve A/c				16,000
	To Premium on Redemption of Deb. A/c				8,000
	(Debentures issued at 20% premium and redeemable at 10% premium)