Question

A.Ltd. issued 50,00,000, 8% Debenture of Rs 100 at a discount of 6% on April 01, 2009 redeemable at premium of 4% by draw of lots as under:

20,00,000 Debentures on March, 2011

10,00,000 Debentures on March, 2013

20,00,000 Debentures on March, 2014

Compute the amount of discount to be written-off in each year till debentures are paid. Also prepare discount/loss on issue of debenture account.

Answer 1

Loss on issue of debenture = 6% (discount on issue) + 4% (premium on redemption) = 10%

At the end of	Debenture Outstanding	Ratio	Loss to be written off every year
March 2010	50,00,00,000	5		=	1,38,88,889
March 2011	50,00,00,000	5		=	1,38,88,889
March 2012	30,00,00,000	3		=	83,33,333
March 2013	30,00,00,000	3		=	83,33,333
March 2014	20,00,00,000	2		=	55,55,556
		18			Rs 5,00,00,000

Loss on Issue of Debenture Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2009 April 01	Debenture		5,00,00,000	2010 March 31	Profit and Loss		1,38,88,889
					Balance c/d		3,61,11,111
			5,00,00,000				5,00,00,000
2010 April 01	Balance b/d		3,61,11,111	2011 March 31	Profit and Loss		1,38,88,889
					Balance c/d		2,22,22,222
			3,61,11,111				3,61,11,111
2011 April 01	Balance b/d		2,22,22,222	2012 March 31	Profit and Loss		83,33,333
					Balance c/d		1,38,88,889
			2,22,22,222				2,22,22,222
2012 April 01	Balance b/d		1,38,88,889	2013 March 31	Profit and Loss		83,33,333
					Balance c/d		55,55,556
			1,38,88,889				1,38,88,889
2013 April 01	Balance b/d		55,55,556	2014 March 31	Profit and Loss		55,55,556
			55,55,556				55,55,556