Question

Exercise

Archana Ltd. issued 2,000 10% Debentures of Rs 100 each at a premium of Rs 10 per Debenture payable as follows:

On Application	Rs 50
On Allotment	Rs 60 (Premium included Rs 10)

The Debentures were fully subscribed and all money was duly received.

Pass Journal entries and show how the amounts appear in Balance Sheet.

Answer 1

Books of Archana Ltd.
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c	Dr.		1,00,000
	To Debenture Application A/c				1,00,000
	(Debenture application money received on 2,000, 10% Debentures of Rs 50 each)
	Debenture Application A/c	Dr.		1,00,000
	To 10% Debentures A/c				1,00,000
	(Debenture application money transferred to 10% Debenture A/c)
	Debenture Allotment A/c	Dr.		1,20,000
	To 10% Debentures A/c				1,00,000
	To Securities Premium A/c				20,000
	(Debenture allotment due on 2,000 shares of Rs 60 each including premium of Rs 10 each)
	Bank A/c	Dr.		1,20,000
	To Debenture Allotment A/c				1,20,000
	(Debenture allotment money received)

Balance Sheet of Archana Ltd.
Liabilities	Amount Rs	Assets	Amount Rs
Reserves and Surplus		Cash at bank	2,20,000
Securities Premium	20,000
Secured Loan
10% Debentures	2,00,000
	2,20,000		2,20,000

Working Note:

Note: As per the textbook solution 2,500, 10% Debentures were issued but according to the question 2,000, 10% Debentures were issued.
Therefore, our solution is as per the information provided in the question.