Question

Nipa Limited issued ₹ 10,00,000 Debentures of ₹ 100 each at a premium of 10% , payable 25% on application (including premium) and the balance on allotment . The debentures were applied for and the amount was dully received.
You are required to give Journal entries and prepare Cash Book.

Answer 1

Face Value of Debenture = Rs 100

Premium (Rs 100 × 10%) = Rs 10

∴ Issue Price = Rs 110

Amount Payable as:

On Application (25%)	Rs 25 including premium of Rs 10 (i.e. Rs 10 + 15)
On Allotment (85%)	Rs 85 per debenture

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Debenture Application A/c	Dr.		2,50,000
	To Debentures A/c				1,50,000
	To Securities Premium A/c				1,00,000
	(Debenture application money received for 10,000 debentures at Rs 25 including premium of Rs10 each transferred to debenture account)
	Debenture Allotment A/c	Dr.		8,50,000
	To Debentures A/c				8,50,000
	(Debentures allotment due on 10,000 Debentures at Rs 85 each)

Cash Book
Dr.							Cr.
Date	Particulars	L.F.	Bank Rs	Date	Particulars	L.F.	Bank Rs
	Debenture Application		2,50,000
	Debenture Allotment		8,50,000
					Balance c/d		11,00,000
			11,00,000				11,00,000