Question

A Ltd issued 10,000, 10% Debentures of Rs.100 each at a premium of 5% payable as follows:

Rs.10 on application, Rs.20 along with premium on allotment and balance on First and Final Call. Record necessary journal entries.

Answer 1

$\text{Journal Entries}$
$\begin{array}{ccccc}\text{Date}& \text{Particulars}& \text{LF}& \text{Amt.(Dr)}& \text{Amt.(Cr)}\\ \left(i\right)& \text{Bank A/c}Dr& & 1,00,000& \\ & \text{To 10\% Debenture Application A/c}& & & 1,00,000\\ & \text{(Application money received for}& & & \\ & \text{10,000 10 \% debentures application at Rs. 10 each)}& & & \\ & \underset{–}{}& & & \\ \left(ii\right)& \text{10 \% Debenture Application A/c}Dr& & 1,00,000& \\ & \text{To 10 \% Debenture A/c}& & & 1,00,000\\ & \text{(Application money at Rs 10 each}& & & \\ & \text{transferred to 10 \% debentures account)}& & & \\ & \underset{–}{}& & & \\ \left(iii\right)& \text{Bank A/c}Dr& & 2,50,000& \\ & \text{To 10\% Debenture Allotment A/c}& & & 2,50,000\\ & \text{(Allotment money received on}& & & \\ & \text{allotment at Rs 25 each for 10,000 10 \% debentures)}& & & \\ & \underset{–}{}& & & \\ \left(iv\right)& \text{10 \% Debenture Allotment A/c}Dr& & 2,50,000& \\ & \text{To 10 \% Debenture A/c}& & & 2,00,000\\ & \text{To Securities Premium A/c}& & & 50,000\\ & \text{(Allotment due at Rs 25 each including}& & & \\ & \text{premium Rs 5 on 10,000, 10 \% debentures)}& & & \\ & \underset{–}{}& & & \\ \left(v\right)& \text{Bank A/c}Dr& & 7,00,000& \\ & \text{To 10\% Debenture First and Final Call A/c}& & & 7,00,000\\ & \text{(First and final call at Rs 70 each}& & & \\ & \text{on 10,000 10 \% debentures due)}& & & \\ & \underset{–}{}& & & \\ \left(vi\right)& \text{10\% Debenture First and Final Call A/c}Dr& & 7,00,000& \\ & \text{To 10 \% Debenture A/c}& & & 7,00,000\\ & \text{(Debenture first and final call received}& & & \\ & \text{at Rs 70 each for 10,000, 10 \% debentures)}& & & \end{array}$

Note : On allotment the term "Along with Premium" means premium in addition i.e, (20+5) Rs.25.