Question

KTR Ltd, issued 365, 9% Debentures of Rs 1,000 each on 4-3-2016.

Pass necessary Journal entries for the issue of debentures in the following situations:

(a) When debentures were issued at par redeemable at a premium of 10%.

(b) When debentures were issued at 6% discount redeemable at 5% premium.

Answer 1

JOURNAL OF KRT LTD.
$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Debit}& \text{Credit}\\ & & & & \text{(Rs)}& \text{(Rs)}\\ \text{Case (a)}& & & & & \\ 2016& & & & & \\ \text{March 4}& \text{Bank A/c}(1,000\times \text{Rs}365)& \text{Dr.}& & 3,65,000& \\ & \text{To 9\% Debenture Application and Allotment A/c}& & & & 3,65,000\\ & \underset{–}{\text{(Being application money received)}}& & & & \\ \text{March 4}& \text{9\% Debenture Application and Allotment A/c}& \text{Dr.}& & 3,65,000& \\ & (1,000\times \text{Rs}365)& & & & \\ & \text{Loss on Issue of Debentures A/c}(1,000\times \text{Rs 36.50})& \text{Dr.}& & 36,500& \\ & \text{To 9\% Debentures A/c}& & & & 3,65,000\\ & \text{To Premium on Redemption of Debentures A/c}& & & & 36,500\\ & \text{(Being transfer of application money to Debentures A/c}& & & & \\ & \underset{–}{\text{issued at par, but redeemable at a premium of 10\%)}}& & & & \\ \text{Case (b)}& & & & & \\ 2016& & & & & \\ \text{March 4}& \text{Bank A/c}(1,000\times \text{Rs}343.10)& \text{Dr.}& & 3,43,100& \\ & \text{To 9\% Debenture Application and Allotment A/c}& & & & 3,43,100\\ & \text{(Being application money received on 1,000 debentures}& & & & \\ & \underset{–}{\text{at a discount of 6\%)}}& & & & \\ \text{March 4}& \text{9\% Debenture Application and Allotment A/c}& \text{Dr.}& & 3,43,100& \\ & \text{Loss on Issue of Debentures A/c}& \text{Dr.}& & 18,250& \\ & \text{Discount on Issue of Debentures A/c}& \text{Dr.}& & 21,900& \\ & \text{To 9\% Debentures A/c}& & & & 3,65,000\\ & \text{To Premium on Redemption on Debentures A/c}& & & & 18,250\\ & (1,000\times 18.25)& & & & \\ & \text{(Being transfer of application money to Debentures A/c}& & & & \\ & \text{issued at 6\% discount, but redeemable at a premium of}& & & & \\ & \text{5\%)}& & & & \end{array}$