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 Ajanta Ltd. in the following cases: 200, 9\% debentures of \rupee1,000 each are issued at 10\% discount and redeemable at par. Balance in Securities Premium account is \rupee15,000. 300, 11\% debentures of \rupee1,000 each are issued at 5\% discount and redeemable at a premium of 10\%. Balance in Securities Premium account is \rupee35,000.

Hint:

In debenture accounting, carefully record discount or loss on issue, redeemable premiums, and write-offs using securities premium and profit and loss accounts.

Answer 1

% Journal Entries \begin{center} Case (i): Issue of 9\% Debentures at 10\% Discount \end{center} \begin{center} \begin{tabular}{|p{3cm}|p{8cm}|p{2.5cm}|p{2.5cm}|} Date & Particulars & Debit (\rupee) & Credit (\rupee)
31-Mar-2023 & Bank A/c & 1,80,000 &
& Discount on Issue of Debentures A/c & 20,000 &
& {0.5cm} To 9\% Debentures A/c & & 2,00,000
& (Issue of 200 debentures at 10\% discount) & &
31-Mar-2023 & Securities Premium A/c & 15,000 &
& Statement of Profit and Loss A/c & 5,000 &
& {0.5cm} To Discount on Issue of Debentures A/c & & 20,000
& (Loss on issue of debentures written off using securities premium and profit and loss) & &
\end{tabular} \end{center} \vspace{0.5cm} \hrule \vspace{0.5cm} \begin{center} Case (ii): Issue of 11\% Debentures at 5\% Discount and Redeemable at 10\% Premium \end{center} % Solution Solution: \begin{center} \begin{tabular}{|p{3cm}|p{8cm}|p{2.5cm}|p{2.5cm}|} Date & Particulars & Debit (\rupee) & Credit (\rupee)
31-Mar-2023 & Bank A/c & 2,85,000 &
& Discount on Issue of Debentures A/c & 15,000 &
& Loss on Issue of Debentures A/c & 30,000 &
& {0.5cm} To 11\% Debentures A/c & & 3,00,000
& {0.5cm} To Premium on Redemption of Debentures A/c & & 30,000
& (Issue of 300 debentures at 5\% discount and redeemable at 10\% premium) & &
31-Mar-2023 & Securities Premium A/c & 35,000 &
& Statement of Profit and Loss A/c & 10,000 &
& {0.5cm} To Discount on Issue of Debentures A/c & & 15,000
& {0.5cm} To Loss on Issue of Debentures A/c & & 30,000
& (Loss on issue written off using securities premium and profit and loss account) & &
\end{tabular} \end{center}