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.

Answer 1

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.

$\begin{array}{l}\text{Loss on issue of Debentures}=10,000\times 9=\text{Rs 90,000}\\ \text{Amount of loss on issue of Debentures to be written off every year}=\frac{90,000}{3}=\text{Rs 30,000 every year}\end{array}$

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