Question

Give journal entries for the issue of debentures in the following conditions.

I. Issued 2,000, $12\%$ debentures of Rs 100 each at par, redeemable also at par.

II. Issued 2,000, $12\%$ debentures of Rs 100 each at a discount of $12\%$ , redeemable at par.

III. Issued 2,000, $12\%$ debentures of Rs 100 each at a premium of $5\%$ , redeemable at par.

IV. Issued 2,000, $12\%$ debentures of Rs 100 each at par but redeemable at $5\%$ premium.

V. Issued 2,000, $12\%$ debentures of Rs 100 each at a discount of $2\%$ , redeemable at a premium of $5\%$ .

VI. Issued 2,000, $12\%$ debentures of Rs 100 each at a premium of $5\%$ , redeemable at a premium of $10\%$ .

Answer 1

I JOURNAL

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Dr (Rs)}& \text{Cr. (Rs)}\\ & \text{Bank A/c}& \text{Dr}& & 2,00,000& \\ & \text{To}12\%\text{Debenture Application and Allotment A/c}& & & & 2,00,000\\ & \text{(Application money received)}& & & & \\ & 12\%\text{Debenture Applciation and Allotment A/c}& \text{Dr}& & 2,00,000& \\ & \text{To}12\%\text{Debenture A/c}& & & & 2,00,000\\ & \text{(Transfer of application money to Debentures Account,}& & & & \\ & \text{issued at par)}& & & & \end{array}$

II JOURNAL

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Dr (Rs)}& \text{Cr. (Rs)}\\ & \text{Bank A/c}& \text{Dr}& & 1,76,000& \\ & \text{To}12\%\text{Debenture Application and Allotment A/c}& & & & 1,76,000\\ & \text{(Application money received)}& & & & \\ & 12\%\text{Debenture Applciation and Allotment A/c}& \text{Dr}& & 1,76,000& \\ & \text{Discount on Issue of Debentures A/c}& \text{Dr}& & 24,000& \\ & \text{To}12\%\text{Debenture A/c}& & & & 2,00,000\\ & \text{(Transfer of application money to Debentures Account,}& & & & \\ & \text{issued at par)}& & & & \end{array}$

III JOURNAL

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Dr (Rs)}& \text{Cr. (Rs)}\\ & \text{Bank A/c}& \text{Dr}& & 2,10,000& \\ & \text{To}12\%\text{Debenture Application and Allotment A/c}& & & & 2,10,000\\ & \text{(Application money received)}& & & & \\ & 12\%\text{Debenture Applciation and Allotment A/c}& \text{Dr}& & 2,10,000& \\ & \text{To}12\%\text{Debenture A/c}& & & & 2,00,000\\ & \text{To Securities Premium Reserve A/c}& & & & 10,000\\ & \text{(Transfer of application money to Debentures Account,}& & & & \\ & \text{issued at a premium of}5\%)& & & & \end{array}$

IV JOURNAL
$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Dr (Rs)}& \text{Cr. (Rs)}\\ & \text{Bank A/c}& \text{Dr}& & 2,00,000& \\ & \text{To}12\%\text{Debenture Application and Allotment A/c}& & & & 2,00,000\\ & \text{(Application money received)}& & & & \\ & 12\%\text{Debenture Applciation and Allotment A/c}& \text{Dr}& & 2,00,000& \\ & \text{Loss on issue of debentures A/c}& \text{Dr}& & 10,000& \\ & \text{To}12\%\text{Debenture A/c}& & & & 2,00,000\\ & \text{To Premium on Redemption A/c}& & & & 10,000\\ & \text{(Transfer of application money to Debentures Account,}& & & & \\ & \text{issued at par, but redeemable at a premium of}5\%)& & & & \end{array}$

V JOURNAL

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Dr (Rs)}& \text{Cr. (Rs)}\\ & \text{Bank A/c}& \text{Dr}& & 1,96,000& \\ & \text{To}12\%\text{Debenture Application and Allotment A/c}& & & & 1,96,000\\ & \text{(Application money received)}& & & & \\ & 12\%\text{Debenture Applciation and Allotment A/c}& \text{Dr}& & 1,96,000& \\ & \text{Loss on issue of debentures A/c}& \text{Dr}& & 14,000& \\ & \text{To}12\%\text{Debenture A/c}& & & & 2,00,000\\ & \text{To Premium on Redemption A/c}& & & & 10,000\\ & \text{(Transfer of application money to Debentures Account,}& & & & \\ & \text{issued at a discount of}2\%\text{and redeemable at a}& & & & \\ & \text{premium of}5\%)& & & & \end{array}$

Note 1 : Loss on issue A/c has been debited by Rs14,000 by grouping together the discount on issue Rs 14,000 and premium on redemption Rs 10,000.

VI JOURNAL

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Dr (Rs)}& \text{Cr. (Rs)}\\ & \text{Bank A/c}& \text{Dr}& & 2,10,000& \\ & \text{To}12\%\text{Debenture Application and Allotment A/c}& & & & 2,10,000\\ & \text{(Application money received)}& & & & \\ & 12\%\text{Debenture Applciation and Allotment A/c}& \text{Dr}& & 2,10,000& \\ & \text{Loss on issue of debentures A/c}& \text{Dr}& & 20,000& \\ & \text{To}12\%\text{Debenture A/c}& & & & 2,00,000\\ & \text{To Securities Premium Reserve A/c}& & & & 10,000\\ & \text{To Premium on Redemption A/c}& & & & 20,000\\ & \text{(Transfer of application money to Debentures}& & & & \\ & \text{Account issued at a premium of}5\%\text{and redeemable at a}& & & & \\ & \text{premium of}10\%)& & & & \end{array}$