Question

On 1st April, 2012, a Limited Company issued $11\%$ Rs 10,00,000 debentures at a discounr of $6\%$ repayable at the end of 5 years at par. Pass journal entries for the issue of debentures and prepare Discount on Issue of debentures Account for five years. Assume that the accounts are closed on 31st March every year.

Answer 1

JOURNAL ENTRIES FOR ISSUE OF DEBENTURES

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Dr (Rs)}& \text{Cr. (Rs)}\\ 2012& & & & & \\ \text{April 31}& \text{Bank A/c}& \text{Dr}& & 9,40,000& \\ & \text{To}11\%\text{Debenture Application and}& & & & \\ & \text{Allotment A/c}& & & & 9,40,000\\ & \text{(Receipt of application money on debentures)}& & & & \\ \text{April 1}& 11\%\text{Debenture Application and Allotment A/c}& \text{Dr}& & 9,40,000& \\ & \text{Discount on Issue of Debenture A/c}& \text{Dr}& & 60,000& \\ & \text{To}11\%\text{Debenture Application and}& & & & 10,00,000\\ & \text{(Issue of Debenture at}6\%\text{discount and}& & & & \\ & \text{redeemable at par)}& & & & \end{array}$

$\begin{array}{ccccccc}\text{Dr}& & & & \text{DISCOUNT ON ISSUE OF DEBENTURES A/C}& & \text{Cr}\end{array}\begin{array}{cccccc}\text{Date}& \text{Particulars}& Rs& \text{Date}& \text{Particulars}& Rs\\ 2012& & & 2013& & \\ \text{April 1}& 11\%\text{Debentures A/c}& 60,000& \text{March 31}& \text{Statement of P and L}& 12,000\\ & & & & (1/5\text{of Rs}60,000)& \\ & & & \text{March 31}& \text{Balance c/d}& 48,000\\ & & \overline{\underset{–}{\underset{–}{60,000}}}& & & \overline{\underset{–}{\underset{–}{60,000}}}\\ 2013& & & 2014& & \\ \text{April 1}& \text{Balance b/d}& 48,000& \text{March 31}& \text{Statement of P and L}& 12,000\\ & & & \text{March 31}& \text{Balance c/d}& 36,000\\ & & \overline{\underset{–}{\underset{–}{48,000}}}& & & \overline{\underset{–}{\underset{–}{48,000}}}\\ 2014& & & 2015& & \\ \text{April 1}& \text{Balance b/d}& 36,000& \text{March 31}& \text{Statement of P and L}& 12,000\\ & & & \text{March 31}& \text{Balance c/d}& 24,000\\ & & \overline{\underset{–}{\underset{–}{36,000}}}& & & \overline{\underset{–}{\underset{–}{36,000}}}\\ 2015& & & 2016& & \\ \text{April 1}& \text{Balance b/d}& 24,000& \text{March 31}& \text{Statement of P and L}& 12,000\\ & & & \text{March 31}& \text{Balance c/d}& 12,000\\ & & \overline{\underset{–}{\underset{–}{24,000}}}& & & \overline{\underset{–}{\underset{–}{24,000}}}\\ 2016& & & 2017& & \\ \text{April 1}& \text{Balance b/d}& 12,000& \text{March 31}& \text{Statement of P and L}& 12,000\\ & & & & & \\ & & \overline{\underset{–}{\underset{–}{12,000}}}& & & \overline{\underset{–}{\underset{–}{12,000}}}\end{array}$