Question:
On 1\textsuperscript{st April, 2022, Helloix Ltd. issued 10,000, 7\% Debentures of ₹ 500 each at a premium of 10\%, redeemable at a premium of 5\% after five years. The company had a balance of ₹ 1,50,000 in the ‘Securities Premium Account’ before the issue.
(a) Pass necessary journal entries for issue of debentures and for writing off Loss on I utilising Securities Premium Account at the end of the first year itself.
(b) Prepare oss on Issue of Debentures Account for the year ended
31st March, 2023.}
On 1\textsuperscript{st April, 2022, Helloix Ltd. issued 10,000, 7\% Debentures of ₹ 500 each at a premium of 10\%, redeemable at a premium of 5\% after five years. The company had a balance of ₹ 1,50,000 in the ‘Securities Premium Account’ before the issue.
(a) Pass necessary journal entries for issue of debentures and for writing off Loss on I utilising Securities Premium Account at the end of the first year itself.
(b) Prepare oss on Issue of Debentures Account for the year ended 31st March, 2023.}
(b) Prepare oss on Issue of Debentures Account for the year ended 31st March, 2023.}
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When issuing debentures at a premium and redeemable at a premium, calculate the loss on issue of debentures by adding the premium on redemption and subtracting the premium received on issue.
Updated On: Jan 18, 2025
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Solution and Explanation
(a) Journal Entries:
\[
\begin{array}{|l|p{8cm}|r|r|}
\hline
Date & Particulars & Dr (₹) & Cr (₹)
\hline 2022 Apr 1 & Bank A/c & 55,00,000 &
& To Debentures A/c & & 50,00,000
& To Securities Premium A/c & & 5,00,000
& \textit{(Amount received on issue of 10,000 debentures at 10\% premium)} & &
\hline 2022 Apr 1 & Loss on Issue of Debentures A/c & 7,50,000 &
& To Premium on Redemption of Debentures A/c & & 2,50,000
& To Securities Premium A/c & & 5,00,000
& \textit{(Loss on issue of debentures due to premium on redemption adjusted)} & &
\hline 2023 Mar 31 & Securities Premium A/c & 7,50,000 &
& To Loss on Issue of Debentures A/c & & 7,50,000
& \textit{(Loss on issue of debentures written off from Securities Premium)} & &
\hline \end{array} \] (b) Loss on Issue of Debentures Account: \[ \begin{array}{|l|r|} \hline Particulars & Amount (₹)
\hline To Premium on Redemption of Debentures A/c & 2,50,000
To Securities Premium A/c (adjusted on issue) & 5,00,000
\hline By Securities Premium A/c (written off) & 7,50,000
\hline Total & 7,50,000
\hline \end{array} \]
\hline 2022 Apr 1 & Bank A/c & 55,00,000 &
& To Debentures A/c & & 50,00,000
& To Securities Premium A/c & & 5,00,000
& \textit{(Amount received on issue of 10,000 debentures at 10\% premium)} & &
\hline 2022 Apr 1 & Loss on Issue of Debentures A/c & 7,50,000 &
& To Premium on Redemption of Debentures A/c & & 2,50,000
& To Securities Premium A/c & & 5,00,000
& \textit{(Loss on issue of debentures due to premium on redemption adjusted)} & &
\hline 2023 Mar 31 & Securities Premium A/c & 7,50,000 &
& To Loss on Issue of Debentures A/c & & 7,50,000
& \textit{(Loss on issue of debentures written off from Securities Premium)} & &
\hline \end{array} \] (b) Loss on Issue of Debentures Account: \[ \begin{array}{|l|r|} \hline Particulars & Amount (₹)
\hline To Premium on Redemption of Debentures A/c & 2,50,000
To Securities Premium A/c (adjusted on issue) & 5,00,000
\hline By Securities Premium A/c (written off) & 7,50,000
\hline Total & 7,50,000
\hline \end{array} \]
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