Question

Shreyas Ltd. issued 10,000 debentures of Rs. 100 each. The public applied for 9,000 debentures which were fully allotted. All the money was received in lump-sum. Give necessary journal entries in the books of Shreyas Ltd.

Hint:

When full debenture money is received in one lump-sum, only a single journal entry is required: Bank A/c Dr. to Debentures A/c.

Answer 1

Shreyas Ltd. issued 10,000 debentures, but the public applied for only 9,000 debentures. Since applications matched the allotment, all 9,000 debentures were allotted. The debentures were issued at face value of Rs. 100 each and the entire amount was received in one lump-sum. The total money received equals 9,000 × 100 = Rs. 9,00,000. As there were no stages of application, allotment or calls, the company passes only one journal entry: receipt of cash and issue of debentures. The debentures account is credited to record liability. 
Journal Entry: 
\[ \begin{array}{lcl} \text{Bank A/c Dr.} & 9,00,000 & \\ \text{To Debentures A/c} & 9,00,000 & \\ \text{(Money received for 9,000 debentures issued at Rs. 100 each)} & & \end{array} \]