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.

Hint:

Discount on debenture issue and premium on redemption are accounted for separately. Adjust balances in the Securities Premium account accordingly.

Answer 1

Journal Entries: \[ \begin{array}{|c|c|c|c|} Date & Particulars & Debit (\rupee) & Credit (\rupee)
2023-04-01 & Bank A/c & 8,55,000 &
& Discount on Issue of Debentures A/c & 45,000 &
& To 6\% Debentures A/c & & 9,00,000
2023-04-01 & Loss on Issue of Debentures A/c & 70,000 &
& To Discount on Issue of Debentures A/c & & 70,000
2023-04-01 & Bank A/c & 6,30,000 &
& Discount on Issue of Debentures A/c & 70,000 &
& To 8\% Debentures A/c & & 7,00,000
& To Securities Premium A/c & & 70,000
\end{array} \]