Question

On 1st April, 2013, ABC Ltd. issued 10,000 , 10% Debentures of ₹ 100 each at a discount of 4% redeemable after 5 years at a premium of 6% .
Pass the necessary journal entries for issue of debentures and writing off Loss on issue of Debentures. Also prepare Loss on issue of Debentures Account.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2013
Apr. 01	Bank A/c	Dr.		9,60,000
	To Debenture Application and Allotment A/c				9,60,000
	(Money received on the issue of debentures)
	Debenture Application and Allotment A/c	Dr.		9,60,000
	Loss on Issue of Debentures A/c	Dr.		1,00,000
	To 9% Debentures A/c				10,00,000
	To Premium on Redemption of Debentures A/c				60,000
	(Debenture application and allotment money transferred to Debentures A/c)
2014-15	Statement of Profit & Loss	Dr.		20,000
	To Loss on Issue of Debentures A/c				20,000
	(One-fifth of the total loss written-off)
2015-16	Statement of Profit & Loss	Dr.		20,000
	To Loss on Issue of Debentures A/c				20,000
	(One-fifth of the total loss written-off)
2016-17	Statement of Profit & Loss	Dr.		20,000
	To Loss on Issue of Debentures A/c				20,000
	(One-fifthof the total loss written-off)
2017-18	Statement of Profit & Loss	Dr.		20,000
	To Loss on Issue of Debentures A/c				20,000
	(One-fifth of the total loss written-off)
2018-19	Statement of Profit & Loss	Dr.		20,000
	To Loss on Issue of Debentures A/c				20,000
	(One-fifth of the total loss written-off)

Working Notes:
WN1:
Calculation of discountamount to be written-off
$\mathrm{Discount}=10,00,000\times \frac{10}{100}=1,00,000$

Discount on Issue of Debentures Account
Dr.									Cr.
Date		Particulars	J.F.	Amount (₹)	Date	Particulars	J.F.	Amount (₹)
2013-14					2013-14
Apr. 01		10% Debentures A/c		1,00,000	Mar. 31	Balance c/d		1,00,000
				1,00,000				1,00,000
2014-15					2014-15
Apr. 01		Balance b/d		1,00,000	Mar. 31	Statement of Profit and Loss		20,000
					Mar. 31	Balance c/d		80,000
				1,00,000				1,00,000
2015-16					2015-16
Apr. 01		Balance b/d		80,000	Mar. 31	Statement of Profit and Loss		20,000
					Mar. 31	Balance c/d		60,000
				80,000				80,000
2016-17					2016-17
Apr. 01		Balance b/d		60,000	Mar. 31	Statement of Profit and Loss		20,000
					Mar. 31	Balance c/d		40,000
				60,000				60,000
2017-18					2017-18
Apr. 01		Balance b/d		40,000	Mar. 31	Statement of Profit and Loss		20,000
					Mar. 31	Balance c/d		20,000
				40,000				40,000
2018-19					2018-19
Apr. 01		Balance b/d		20,000	Mar. 31	Statement of Profit and Loss		20,000
				20,000				20,000