Question

Pass necessary journal entries in the following cases :
(i) $Z$ Ltd redeemed $1500$, $12\%$ debentures of Rs $100$ each issued at a discount of $6\%$ by converting them into equity shares of Rs $100$ each issued at a premium of Rs $25$ per share.
(ii) $X$ Ltd. converted $1,000,12\%$ debentures of Rs $100$ each issued at a discount of Rs $10$ per debenture into equity shares of Rs $100$ each Rs $90$ paid up.

Answer 1

(i)Number of Shares to be issued $=\frac{AmountPayable}{IssuePrice}=\frac{1,41,000}{125}=1,128$ shares
(ii) Number of Share to be issued $=\frac{AmountPayable}{IssuePrice}=\frac{90,000}{(100-10)}=\frac{90,000}{90}=1,000$ shares.