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Question

Global Ltd.issued 10,000, 8% Debentures of ₹ 100 each redeemable at the end of 3 years at a premium of ₹ 9.
Pass the journal entries for writing off the Loss on Issue of Debentures. Also prepare Loss on Issue of Debentures Account.

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Solution

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

Statement of Profit & Loss A/c

Dr.

30,000

To Loss on Issue of Debentures A/c

30,000

(Loss on Issue of Debentures written off)

Note: This entry will be passed for next two years.

Loss on issue of Debentures=10,000×9=Rs 90,000Amount of loss on issue of Debentures to be written off every year=90,0003=Rs 30,000 every year

Loss on Issue of Debentures Account

Dr.

Cr.

Date

Particulars

Amount

(Rs)

Date

Particulars

Amount

(Rs)

Year 1

8% Debentures A/c

90,000

Year 1

Statement of Profit & Loss A/c

30,000

Balance c/d

60,000

90,000

90,000

Year 2

Balance b/d

60,000

Year 2

Statement of Profit & Loss A/c

30,000

Balance c/d

30,000

60,000

60,000

Year 3

Balance b/d

30,000

Year 3

Statement of Profit & Loss A/c

30,000

30,000

30,000


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