Question

Exercise

Tanagi Ltd. issued Rs 10,000 12% debentures of Rs 100 each at a discount of 5% Payable as follows:

On Application Rs 40

On Allotment Rs 55

Show journal entries assuming that all the installments were duly collected. Also show the relevant portion of the balance sheet.

Answer 1

Books of Tanagi Ltd.
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c	Dr.		4,00,000
	To Debenture Application A/c				4,00,000
	(Debenture application received on 10,000 12% Debentures of Rs 40 each)
	Debenture Application A/c	Dr.		4,00,000
	To 12% Debentures A/c				4,00,000
	(Debenture application money transferred to 12% Debenture A/c)
	Debenture Allotment A/c	Dr.		5,50,000
	Discount on Issue of Debentures A/c			50,000
	To 12% Debentures A/c				6,00,000
	(Debenture Allotment due on 10,000 12% Debenture of Rs 55 each, issued @ discount of 5%)
	Bank A/c	Dr.		5,50,000
	To Debenture Allotment A/c				5,50,000
	(Debenture Allotment received on 10,000, 12% Debentures of Rs 55 each)

Balance Sheet of Tanaji Ltd.
Liabilities	Amount Rs	Assets	Amount Rs
Secured loans		Cash at bank	9,50,000
12% Debentures	10,00,000	Miscellaneous Exp. - Discount on Issue of Debentures	50,000
	10,00,000		10,00,000

Working Notes: