Question

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.

Answer 1

Journal of Traditional Products Ltd

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F}& \text{Dr (Rs)}& \text{Cr. (Rs)}\\ & \text{Bank A/c}& \text{Dr}& & 6,00,00,000& \\ & \text{To}8\%\text{Debenture Application A/c}& & & & 6,00,00,000\\ & \text{(Application money received on 3,00,000}& & & & \\ & at\text{debentures at Rs 200 each}& & & & \\ & 8\%\text{Debenture Application A/c}& \text{Dr}& & 6,00,00,000& \\ & \text{To}8\%\text{Debentures A/c}& & & & 3,00,00,000\\ & \text{To Securities Premium Reserve A/c}& & & & 1,00,00,000\\ & \text{To}8\%\text{Debentures Allotment A/c}& & & & 2,00,00,000\\ & \text{(Transfer of application money}8\%& & & & \\ & \text{Debentures A/c and the excess money to}& & & & \\ & \text{Allotment A/c}& & & & \\ & \text{Bank A/c}& \text{Dr}& & 5,00,00,000& \\ & \text{To}8\%\text{Debentures Allotment A/c}& & & & 5,00,00,000\\ & \text{(Allotment money received on 2,00,000 debentures at Rs 350)}& & & & \\ & \text{each)}& & & & \\ & \text{8\% Debentures Allotment A/c}& \text{Dr}& & 7,00,00,000& \\ & \text{To}8\%\text{Debenture A/c}& & & & 7,00,00,000\\ & \text{(Allotment money transferred to debentures account)}& & & & \end{array}$