Question

Typhoo Ltd.issued 5,000, 9% Debentures of ₹ 100 each at a discount of 5% redeemable at the end of 5 years at a premium of 10%. Typhoo Ltd.has a balance of ₹ 2,00,000 in Securities Premium Reserve . Loss on Issue of debentures is to be written off equally over the life of debentures from Securities Premium Reserve to the extent possible.
Pass the journal entries for writing off the Loss on Issue of Debentures.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	Security Premium Reserve A/c	Dr.		15,000
	To Loss on Issue of Debentures A/c				15,000
	(Loss on Issue of Debentures written off)

Note: The above entry will be passed for every year for 5 years.

$\begin{array}{l}\text{Loss on issue of Debentures}=5,00,000\times 15\%=\text{Rs 75,000}\\ \text{Amount of loss on issue of Debentures to be written off every year}=\frac{75,000}{5}=\text{Rs 15,000 every year}\end{array}$