Q 7 Explain with an imaginary example how issue of debenture as collateral security is shown in the balance - Accountancy - Issue and Redemption of Debentures

Question

Q 7 Explain with an imaginary example how issue of debenture as
collateral security is shown in the balance sheet of a company when
it is recorded in the books of accounts

Neha Chopra · Accepted Answer

Dear Student

Suppose X ltd took bank loan of 1,00,000/- and issued 18%
debentures as collateral security for bank, and these are recorded
in books of accounts as follows :

Debenture Suspense
A/c
Dr
100,000

To 18% Debenture
A/c

100,000

(Being debenture issued
as collateral security)

When debenture are issued
as collateral security and recorded in books of accounts , then
they would be shown in balance sheet as follows

Balancesheet for X
ltd

Liabilities

Amount
Assets

Amount

(Rs)

Secured Loan
:

Bank
Loan

100,000

18%
Debentures
100,000

Less : Debeture
Suspense
100,000
0

Regards

Debenture Suspense A/c	Dr.	100,000
To 18% Debenture A/c			100,000
(Being debenture issued as collateral security)

Balancesheet for X ltd.

Liabilities		Amount	Assets	Amount
Liabilities		(Rs)	Assets	(Rs)

Secured Loan :
Bank Loan		100,000
18% Debentures	100,000
Less : Debeture Suspense	100,000	0

Q.7. Explain with an imaginary example how issue of debenture as collateral security is shown in the balance sheet of a company when it is recorded in the books of accounts.