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.

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Solution

Books of A. Ltd.

Debenture Account

Dr.

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

Bank (Redemption)

1,00,000

Bank

4,75,000

Balance c/d

4,00,000

Discount on Issue of Debentures

25,000

5,00,000

5,00,000

Discount on Issue of Debentures

Dr.

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

1^st year

Debenture A/c

25,000

1^st year

Profit and Loss

8,333

Balance c/d

16,667

25,000

25,000

Writing of Discount on Issue of Debenture

Year

Debenture
Outstanding

Ratio

Amount written off

Year 1

5,00,000

5

=

8,333

Year 2

4,00,000

4

=

6,667

Year 3

3,00,000

3

=

5,000

Year 4

2,00,000

2

=

3,333

Year 5

1,00,000

1

=

1,667

15

Rs 25,000

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Books of A. Ltd. Debenture Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
	Bank (Redemption)		1,00,000		Bank		4,75,000
	Balance c/d		4,00,000		Discount on Issue of Debentures		25,000
			5,00,000				5,00,000

Discount on Issue of Debentures
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
1^st year	Debenture A/c		25,000	1^st year	Profit and Loss		8,333
					Balance c/d		16,667
			25,000				25,000

Year	Debenture Outstanding	Ratio	Amount written off
Year 1	5,00,000	5		=	8,333
Year 2	4,00,000	4		=	6,667
Year 3	3,00,000	3		=	5,000
Year 4	2,00,000	2		=	3,333
Year 5	1,00,000	1		=	1,667
		15			Rs 25,000

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.

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.