Question

Manoj Kumar Pvt. Ltd issued a prospectus inviting applications for 1,00,000 shares of Rs 10 each at a premium of Rs 2.50 per share payable as follows : on Applicaton Rs 5, on Allotment Rs 5 (including premium), on First Call Rs 2.5. The company received applications for 1,50,000 shares, allotment was made on pro-rata basis. Over subscribed money received on application was adjusted with the amount due on allotment. Mr. Hemant to whom 200 shares were allotted failed to pay the allotment money and the first call. On his subsequent failure to Mohan as fully paid for Rs 9 per share. Pass necessary Journal entries in the books of company for recording the above transactions.

OR

On 1-04-2017, K.S Ltd issued 80,000, 9% Debentures of Rs 100 each at a discount of 10% redeemable at a premium of 5% after 3 years. The company closes its books on 31st March every year. Interest is payable on 30th September and 31st March every year.The rate of tax @10%. Pass necessary Journal entries for the issue of debentures and debenture interest for the year ended 31st March, 2018.

Answer 1

JOURNAL
$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Debit}& \text{Credit}\\ & & & & \text{(Rs)}& \text{(Rs)}\\ & \text{Bank A/c}& Dr.& & 7,50,000& \\ & \text{To Equity Share Application A/c}& & & & 7,50,000\\ & \underset{–}{\text{(Being application money received)}}& & & & \\ & \text{Equity Share Application A/c}& Dr.& & 7,50,000& \\ & \text{To Equity Share Capital A/c}& & & & 5,00,000\\ & \text{To Equity Share Allotment A/c}& & & & 2,50,000\\ & \underset{–}{\text{(Being application money adjusted)}}& & & & \\ & \text{Equity Share Allotment A/c}& Dr.& & 5,00,000& \\ & \text{To Equity Share Capital A/c}& & & & 2,50,000\\ & \text{To Securities Premium Reserve A/c}& & & & 2,50,000\\ & \underset{–}{\text{(Being allotment money due)}}& & & & \\ & \text{Bank A/c}& Dr.& & 2,49,500& \\ & \text{Calls in Arrears A/c}& Dr.& & 500& \\ & \text{To Equity Share Allotment A/c}& & & & 2,50,000\\ & \underset{–}{\text{(Being allotment money received except on 200 shares)}}& & & & \\ & \text{Equity Share Call A/c}& Dr.& & 2,50,000& \\ & \text{To Equity Share Capital A/c}& & & & 2,50,000\\ & \underset{–}{\text{(Being call money due)}}& & & & \\ & \text{Bank A/c}& Dr.& & 2,49,500& \\ & \text{Calls in Arrears A/c}& Dr.& & 500& \\ & \underset{–}{\text{(Being call money received except on 200 shares)}}& & & & \\ & \text{Equity Share Capital A/c}& Dr.& & 2,000& \\ & \text{To Calls in Arrears A/c}& & & & 1,000\\ & \text{To Share Forfeiture A/c*}& & & & 1,000\\ & \underset{–}{\text{(Being 200 shares forefeited)}}& & & & \\ & \text{Bank A/c}& Dr.& & 1,800& \\ & \text{Share Forfeiture A/c}& Dr.& & 200& \\ & \text{To Equity Share Capital A/c}& & & & 2,000\\ & \underset{–}{\text{(Being forfeited shares re-issured@Rs 9 per share)}}& & & & \\ & \text{Share Forfeiture A/c}& Dr.& & 800& \\ & \text{To Capital Reserve A/c}& & & & 800\\ & \text{(Being profit on cancellation transfer to capital reserve)}& & & & \end{array}$

*It is assumed that the excess amount received on application is adjusted towards security premium, in case of forfeited shares.

OR

JOURNAL
$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Debit}& \text{Credit}\\ & & & & \text{(Rs)}& \text{(Rs)}\\ 2017& \text{Bank A/c}& Dr.& & 72,00,000& \\ \text{April 1}& \text{To Debenture Application and Allotment A/c}& & & & 72,00,000\\ & \text{(Being application money received on 80,000 debentures}& & & & \\ & \underset{–}{\text{@ Rs 100 each after a discount 10}\%)}& & & & \\ \text{April 1}& \text{Debenture Application and Allotment A/c}& Dr.& & 72,00,000& \\ & \text{Discount on Issue of Debenture A/c}& Dr.& & 8,00,000& \\ & \text{Loss on Issue of Debenture A/c}& Dr.& & 4,00,000& \\ & \text{To 9}\%\text{Debenture A/c}& & & & 80,00,000\\ & \text{To Premium on Redemption A/c}& & & & 4,00,000\\ & \text{(Being debentures Issued at a discount at 10\%) and}& & & & \\ & \underset{–}{\text{redeemable at a premium of 5}\%}& & & & \\ \text{Sept.30}& \text{Debenture Interest A/c}& Dr.& & 3,60,000& \\ & \text{To Debentuerholder's A/c}& & & & 3,24,000\\ & \text{To TDS A/c}& & & & 36,000\\ & \underset{–}{\text{(Being interest due to debentueholders)}}& & & & \\ \text{Sept. 30}& \text{Debentureholder's A/c}& Dr.& & 3,24,000& \\ & \text{TDS A/c}& Dr.& & 36.000& \\ & \text{To Bank A/c}& & & & 3,60,000\\ & \text{(Being interest paid to debentureholders and TDS to}& & & & \\ & \underset{–}{\text{government)}}& & & & \\ 2018& \text{Debenture Interest A/c}& Dr.& & 3,60,000& \\ \text{March 31}& \text{To Debentueholder's A/c}& & & & 3,24,000\\ & \text{To TDS A/c}& & & & 36,000\\ & \underset{–}{\text{(Being interest due to debentureholders)}}& & & & \\ \text{March 31}& \text{Debentureholder's A/c}& \text{Dr.}& & 3,24,000& \\ & \text{TDS A/c}& \text{Dr.}& & 36,000& \\ & \text{To Bank A/c}& & & & 3,60,000\\ & \text{(Being interest paid to debentureholders and TDS to}& & & & \\ & \underset{–}{\text{government)}}& & & & \\ \text{March 31}& \text{Statement of Profit and Loss A/c}& Dr.& & 7,20,000& \\ & \text{To Debenture Interest A/c}& & & & 7,20,000\\ & \text{(Being interest transferred to profit and loss A/c)}& & & & \end{array}$