On 1st April, 2014, KK Ltd., invited applications for issuing $5, 000$ $10$ % debentures of Rs. $1, 000$ each at a discount of $6$ %. These debentures were repayable at the end of $3^{r d}$ year at a premium of $10$ %. Applications for $6, 000$ debentures were received and the debentures were allotted on pro-rata basis to all the applicants. Excess money received with applications was refunded.
The directors decided to transfer the minimum amount to Debenture Redemption Reserve on 31,3,2016. On 1.4.2016, the company invested the necessary amount in $9$ % bank fixed deposit as per the provisions of the Companies Act, 2013. Tax was deducted at source by bank on interest @ $10$ % p.a.
Pass the necessary journal entries for issue and redemption of debentures. Ignore entries relating to writing off loss on issue of debentures and interest paid on debentures.

Open in App

Solution

sr.no particulars amt amt
1 Bank a/c __dr
To debenture application a/c
(being application money received) 5640000
5640000
2 Debenture application dr
To bank a/c
(Being amount refunded) 94000
94000
3 Debenture application dr
Loss on issue a/c _dr
To debenture a/c
To Premium on redemption a/c
(Being redemption entry passed) 470000
800000
5000000
500000
4 Profit and loss appropriation a/c_dr
To debenture redemption reserve a/c
(Being DRR created) 2500000
2500000
5 DRR____dr
To general reserve a/c
(Being DRR transferred) 2500000
2500000

Suggest Corrections

Similar questions

Ruchi Ltd. issued 42,000, $7 %$ Debentures of Rs 100 each on 1st April, 2011, redeemable at a premium of $8 %$ on 31st March 2015. The company decided to create required Debenture Redemption Reserve on 31st March 2014. The company invested the funds as required by law in a fixed deposit with State Bank of India on 1st April, 2014 earning interest at $10 %$ per annum. Tax was deducted at source by the bank on interest at $10 %$ . Pass necessary Journal Entries regarding issue ans redemption of debentures.

Q. Narain Laxmi Ltd. invited applications for issuing 7,500; 12% Debentures of ₹ 100 each at a premium of ₹ 35 per debenture . The full amount was payable on application. Applications were received for 10,000 Debentures. Allotment was made to all the applications on pro rata.
Pass necessary Journal entries for the above transactions in the books of Narain Laxmi Ltd.

Manish Ltd. issued Rs 38,00,000; $8 %$ Debentures of Rs 100 each on 1st April,2013. The terms of issue stated that the debentures were due to redeemed at a premium of $5 %$ on 30th June, 2015. The Company decided to transfer out of profits Rs 5,50,000 to Debenture Redemption Reserve on 31st March, 2014 and Rs 4,00,000 on 31st March, 2015.

Pass the necessary Journal entries the issue and redemption of debentures, without providing for either the interest or loss on issue of debentures.

Surya Ltd. issued 2,500, $15 %$ Debentures of Rs 100 each at a discount of $10 %$ payabale as follows:

Rs 25 on application; Rs 25 on allotment and the balance on first call.

Applications were received for 2,000 debentures and the allotment was made. All the moneys were dully received. Expenses on issue of deberatures amounted to Rs 8,000. Directors decided to write off 1/5th of "Expenses on issue A/c" and "Discount on Debentures A/c" from Statement of profit and loss each year.

Pass journal entries (for first year only).

Traditional products Ltd. offered 2,00,000, $8 %$ Debentures of Rs 500 each at a premium of $10 %$ payable as Rs 200 on application (including premium) and balance on allotment, redeemable at par after 8 years. But applications are received for 3,00,000 debentures and the allotment is made on pro-rata basis. All the money due on application and allotment is received. Record necessary entries regarding issue of debentures.

Join BYJU'S Learning Program

sr.no	particulars	amt	amt
1	Bank a/c ____dr To debenture application a/c (being application money received)	5640000	5640000
2	Debenture application ____dr To bank a/c (Being amount refunded)	94000	94000
3	Debenture application ____dr Loss on issue a/c _____dr To debenture a/c To Premium on redemption a/c (Being redemption entry passed)	470000 800000	5000000 500000
4	Profit and loss appropriation a/c___dr To debenture redemption reserve a/c (Being DRR created)	2500000	2500000
5	DRR____dr To general reserve a/c (Being DRR transferred)	2500000	2500000