Question:
Pass necessary journal entries relating to the issue of debentures and to write off discount/loss on issue of debentures in the books of Srijan Ltd. in the following cases:
(i)900, 6\% debentures of \rupee 1,000 each are issued at 5\% discount and redeemable at par. Balance in Securities Premium account is \rupee 50,000.
(ii)700, 8\% debentures of \rupee 1,000 each are issued at 10\% discount and redeemable at a premium of 10\%. Balance in Securities Premium account is \rupee 1,00,000.
Pass necessary journal entries relating to the issue of debentures and to write off discount/loss on issue of debentures in the books of Srijan Ltd. in the following cases:
(i)900, 6\% debentures of \rupee 1,000 each are issued at 5\% discount and redeemable at par. Balance in Securities Premium account is \rupee 50,000.
(ii)700, 8\% debentures of \rupee 1,000 each are issued at 10\% discount and redeemable at a premium of 10\%. Balance in Securities Premium account is \rupee 1,00,000.
(i)900, 6\% debentures of \rupee 1,000 each are issued at 5\% discount and redeemable at par. Balance in Securities Premium account is \rupee 50,000.
(ii)700, 8\% debentures of \rupee 1,000 each are issued at 10\% discount and redeemable at a premium of 10\%. Balance in Securities Premium account is \rupee 1,00,000.
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Discount on debenture issue and premium on redemption are accounted for separately. Adjust balances in the Securities Premium account accordingly.
Updated On: Jan 28, 2025
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Solution and Explanation
Journal Entries:
\[
\begin{array}{|c|c|c|c|}
Date & Particulars & Debit (\rupee) & Credit (\rupee)
2023-04-01 & Bank A/c & 8,55,000 &
& Discount on Issue of Debentures A/c & 45,000 &
& To 6\% Debentures A/c & & 9,00,000
2023-04-01 & Loss on Issue of Debentures A/c & 70,000 &
& To Discount on Issue of Debentures A/c & & 70,000
2023-04-01 & Bank A/c & 6,30,000 &
& Discount on Issue of Debentures A/c & 70,000 &
& To 8\% Debentures A/c & & 7,00,000
& To Securities Premium A/c & & 70,000
\end{array} \]
2023-04-01 & Bank A/c & 8,55,000 &
& Discount on Issue of Debentures A/c & 45,000 &
& To 6\% Debentures A/c & & 9,00,000
2023-04-01 & Loss on Issue of Debentures A/c & 70,000 &
& To Discount on Issue of Debentures A/c & & 70,000
2023-04-01 & Bank A/c & 6,30,000 &
& Discount on Issue of Debentures A/c & 70,000 &
& To 8\% Debentures A/c & & 7,00,000
& To Securities Premium A/c & & 70,000
\end{array} \]
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\vspace{0.2cm} \begin{tabular}{|l|r|r|} \hline Particulars & Dr. Amount (Rs) & Cr. Amount (Rs)
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