Question

Pass necessary Journal entries for the issue of debentures in the following cases:
(a) ₹ 40,000; 12% Debentures of ₹ 100 each issued at a premium of 5% redeemable at par.
(b) ₹ 70,000; 12% Debentures of ₹ 100 each issued at a premium of 5% redeemable at ₹ 110.

Answer 1

(a)

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c	Dr.		42,000
	To Debenture Application A/c				42,000
	(400 debentures issued at Rs 100 at a premium of 5%)
	Debenture Application A/c	Dr.		42,000
	To 12% Debenture A/c				40,000
	To Securities Premium A/c				2,000
	(400 debentures issued at a premium of 5% and redeemable at par)

(b)

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bank A/c	Dr.		73,500
	To Debenture Application A/c				73,500
	(700 debentures issued at Rs 100 at a premium of 5%)
	Debenture Application A/c	Dr.		73,500
	Loss on Issue of Debentures A/c	Dr.		7,000
	To 12% Debenture A/c				70,000
	To Securities Premium A/c				3,500
	To Premium on Redemption A/c				7,000
	(70,000 debentures issued at a premium of 5% and redeemable at Rs 110)