Question

Alka Ltd. issued 5,000, 10% Debentures of Rs 1,000 each at a discount of 10% redeemable at a preminum of 5% after 5 years. According to the terms of issue, Rs 500 was payable on application and the balance amount on allotment of debentures.

Record necessary journal entries regarding issue of 10% debentures.

Answer 1

JOURNAL OF ALKA LTD.
$\begin{array}{ccccc}\text{Date}& \text{Particulars}& \text{L.F}& \text{Debit}& \text{Credit}\\ & & & \text{(Rs)}& \text{(Rs)}\\ & \text{Bank A/c}(5,000\times 500)\text{Dr}.& & 25,00,000& \\ & \text{To Debentures Application A/c}& & & 25,00,000\\ & \text{(Being application money received on}5,000;10\%& & & \\ & \underset{–}{\text{debentures @ Rs 500 each)}}& & & \\ & \text{Debentures Application A/c}\text{Dr.}& & 25,00,000& \\ & \text{To}10\%\text{Debentures A/c}& & & 25,00,000\\ & \underset{–}{\text{(Being application money adjusted)}}& & & \\ & \text{Debentures Allotment A/c}\text{Dr.}& & 20,00,000& \\ & \text{Loss on issue of Debentures A/c}\text{Dr.}& & 7,50,000& \\ & \text{To}10\%\text{Debentures A/c}& & & 25,00,000\\ & \text{To Preminum on Redemption of Debentures A/c}& & & 2,50,000\\ & (\text{Being allotment of debentures at a discount of}10\%& & & \\ & \underset{–}{\text{and redeemable at a preminum of}5\%)}& & & \\ & \text{Bank A/c}\text{Dr.}& & 20,00,000& \\ & \text{To Debentures Allotment A/c}& & & 20,00,000\\ & \text{(Being allotment money received)}& & & \end{array}$