'Ananya Ltd.' had an authorised capital of ₹ 10,00,00,000 divided into 10,00,000 equity shares of ₹ 100 each. The company had already issued 2,00,000 shares. The dividend paid per share for the year ended 31st March,2007 was ₹ 30 . The management decided to export its products to African countries . To meet the requirements of additional funds, the finance manager put up the following three alternate proposals before the Board of Directors:
(a) Issue 47,500 equity shares at a premium of ₹ 100 per share .
(b) Obtain a long-term loan from bank which was available at 12% per annum.
(c) Issue 9% Debentures at a discount of 5%.
After evaluating these alternatives , the company decided to issue 1,00,000,9% Debentures on 1st April,2008. The face value of each debentures was ₹ 100 . These debentures were redeemable in four installments starting from the end of third year, which were as follows:

Year III IV V VI

Amount (₹) 10,00,000 20,00,000 30,00,000 40,00,000

Prepare 9% Debenture Account form 1st April, 2008 till all the debentures were redeemed.

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Solution

9% Debentures Account

Dr.

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

2009

2008

Mar. 31

Balance c/d

1,00,00,000

Apr. 01

Debenture Application A/c

95,00,000

Apr. 01

Discount on Issue of Debentures A/c

5,00,000

1,00,00,000

1,00,00,000

2010

2009

Mar. 31

Balance c/d

1,00,00,000

Apr. 01

Balance b/d

1,00,00,000

1,00,00,000

1,00,00,000

2011

2010

Mar. 31

Debentureholders’ A/c

10,00,000

Apr. 01

Balance b/d

1,00,00,000

Mar. 31

Balance c/d

90,00,000

1,00,00,000

1,00,00,000

2012

2011

Mar. 31

Debentureholders’ A/c

20,00,000

Apr. 01

Balance b/d

90,00,000

Mar. 31

Balance c/d

70,00,000

90,00,000

90,00,000

2013

2012

Mar. 31

Debentureholders’ A/c

30,00,000

Apr. 01

Balance b/d

70,00,000

Mar. 31

Balance c/d

40,00,000

70,00,000

70,00,000

2014

2013

Mar. 31

Debentureholders’ A/c

40,00,000

Apr. 01

Balance b/d

40,00,000

40,00,000

40,00,000

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Similar questions

Bharat Ltd had an authorized capital of Rs 20,00,000 divided into 2,00,000 equity shares of Rs 10 each. The company issued 1,00,000 shares and the dividend paid per share was Rs 2 for the year ended 31-3-2008. The management of the company decided to export its products to the neighbouring countries Nepal, Bhutan, Sri Lanka and Bangladesh. To meet the requirement of additional funds the financial manager of the company put up the following three alternatives before its Board of Directors:

(i) Issue 54,000 equity shares.

(ii) Obtain a loan from Import and Export Bank of India. The loan was available at $12 %$ per annum interest.

(iii) To issue $9 %$ Debentures at a discount of $10 %$ .

After comparing the available alternatives the company decided on 1-4-2008 to issue 6,000 $9 %$ debentures of Rs 100 each at a discount of $10 %$ . These debentures were redeemable in four instalments starting from the end of third year. The amount of debentures to be redeemed at the end of third, fourth, fifth and sixth year was as follows:

$\begin{matrix} Year & Amount of Debentures to be redeemed I I I & 1, 00, 000 I V & 1, 00, 000 V & 2, 00, 000 V I & 2, 00, 000 \end{matrix}$

Prepare $9 %$ Debentures Account for the years 2008-09 to 2013-14.

Q. On 1st April, 2015. Mathew Ltd. issued 10,000, 9% Debentures of ₹ 100 each at a discount of 5%, redeemable at a premium of 5%. These debentures were redeemable as follows:

On 31st March, 2016	2,000 Debentures;
On 31st March, 2017	5,000 Debentures;
On 31st March, 2018	3,000 Debentures.

Prepare the Loss on Issue of Debentures Account, Debentures Account and Premium on Redemption of Debentures Account for three years.

A company issued debentures of the face value of Rs 10,00,000 at a discount of $6 %$ on 1st April, 2012. These debentures are redeemable by annual drawings of Rs 2,00,000 made on 31st March each year. The directors decided to write off discount based on the debentures outstanding each year. Prepare Discount on Issue of Debentures account for five years.

Q. On April 01, 2014, a company made an issue of 5,000, 8% debentures of Rs 100 each at Rs 94 per debentures. The terms of issue provided for the redemption of 1,000 debenture every year starting from March 31, 2016 either by purchase from open market or by converting them into Equity shares of Rs 10 each at a premium of Rs 2.50 per share. On March 31, 2016, the company redeemed 1,000 debentures by converting them into equity shares. Give the necessary journal entries.

Q. Manish Ltd. issued ₹ 40,00,000; 8% Debentures of ₹ 100 each on 1st April, 2017. The terms of issue stated that the debentures are to be redeemed at a premium of 5% on 30th June, 2019. The company decided to transfer ₹ 10,00,000 out of profits to Debentures Redemption Reserve on 31st March, 2018 and ₹ 10,00,000 on 31st March, 2019.
Pass Journal entries regarding the issue and redemption of debentures, DRR and Investment without providing for the interest or loss on issue of debentures.

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Year	III	IV	V	VI
Amount (₹)	10,00,000	20,00,000	30,00,000	40,00,000

9% Debentures Account
Dr.				Cr.
Date	Particulars	J.F.	Amount Rs		Date	Particulars	J.F.	Amount Rs
2009					2008
Mar. 31	Balance c/d		1,00,00,000		Apr. 01	Debenture Application A/c		95,00,000
					Apr. 01	Discount on Issue of Debentures A/c		5,00,000
			1,00,00,000					1,00,00,000

2010					2009
Mar. 31	Balance c/d		1,00,00,000		Apr. 01	Balance b/d		1,00,00,000

			1,00,00,000					1,00,00,000
2011					2010
Mar. 31	Debentureholders’ A/c		10,00,000		Apr. 01	Balance b/d		1,00,00,000
Mar. 31	Balance c/d		90,00,000
			1,00,00,000					1,00,00,000

2012					2011
Mar. 31	Debentureholders’ A/c		20,00,000		Apr. 01	Balance b/d		90,00,000
Mar. 31	Balance c/d		70,00,000
			90,00,000					90,00,000
2013					2012
Mar. 31	Debentureholders’ A/c		30,00,000		Apr. 01	Balance b/d		70,00,000
Mar. 31	Balance c/d		40,00,000

			70,00,000					70,00,000
2014					2013
Mar. 31	Debentureholders’ A/c		40,00,000		Apr. 01	Balance b/d		40,00,000

			40,00,000					40,00,000