Question

A Ltd Company issued Rs 5,00,000 Debentures at a discount of $5\%$ repayable at par by annual drawings of Rs 1,00,000.
Make the necessary ledger accounts in the books of the company for the first year.

Answer 1

$\begin{array}{ccc}\text{Dr}& \text{Debenture Account}& \text{Cr}\end{array}$

$$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}& \text{Date}& \text{Particulars}& & \text{Amt. (Rs)}\\ 2001& & & & 2001& & & \\ \text{Jan 1}& \text{10\%}& & 7,200& \text{Dec 31}& \text{Profit and}& & 1,800\\ & \text{Debenture}& & & & \text{Loss}& & \\ & & & & & \text{Balance c/d}& & 5,400\\ & & & \overline{\underset{–}{7,200}}& & & & \overline{\underset{–}{7,200}}\\ 2002& & & & 2002& & & \\ \text{Jan 1}& \text{Balance b/d}& & 5,400& \text{Dec 31}& \text{Profit and}& & 1,800\\ & & & & & \text{Loss}& & \\ & & & & & \text{Balance c/d}& & 3,600\\ & & & \overline{\underset{–}{5,400}}& & & & \overline{\underset{–}{5,400}}\\ 2003& & & & 2003& & & \\ \text{Jan 1}& \text{Balance b/d}& & 3,600& \text{Dec 31}& \text{Profit and}& & 1,800\\ & & & & & \text{Loss}& & \\ & & & & & \text{Balance c/d}& & 1,800\\ & & & \overline{\underset{–}{3,600}}& & & & \overline{\underset{–}{3,600}}\\ 2004& & & & 2004& & & \\ \text{Jan 1}& \text{Balance b/d}& & 1,800& \text{March 31}& \text{Profit and}& & 1,200\\ & & & & & \text{Loss}& & \\ & & & & & \text{Balance c/d}& & 600\\ & & & \overline{\underset{–}{1,800}}& & & & \overline{\underset{–}{1,800}}\\ 2005& & & & 2005& & & \\ \text{Jan 1}& \text{Balance b/d}& & 600& \text{March 31}& \text{Profit and}& & 600\\ & & & & & \text{Loss}& & \\ & & & \overline{\underset{–}{600}}& & & & \overline{\underset{–}{6,00}}\end{array}$$

Working Note
Amount of Discount on Issue of Debenture $=1,20,000\times \frac{6}{100}=7,200$

$$\begin{array}{cccc}\text{Year}& \text{Debenture Outstanding}& \text{Ratio}& \text{Amount Written off Every Year}\\ \text{2001}& \text{1,20,000}& \text{3}& 7,200\times \frac{3}{12}=1,800\\ \text{2002}& \text{1,20,000}& \text{3}& 7,200\times \frac{3}{12}=1,800\\ \text{2003}& \text{1,20,000}& \text{3}& 7,200\times \frac{3}{12}=1,800\\ \text{2004}& \text{80,000}& \text{2}& 7,200\times \frac{2}{12}=1,200\\ \text{2005}& \text{40,000}& \text{1}& 7,200\times \frac{2}{12}=600\\ & & 12& Rs7,200\end{array}$$