Issue of Debentures ( Question Bank)

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 Issue of Debentures


What is the Maximum discount limit on issue of debentures as per law?

  1. Not Fixed
  2. 10%
  3. 15%
  4. 6%

 

Retro Limited issued 1,000, 11% debentures of Rs.100 each at a discount of 10%. Applications were received for 1500 debentures and pro-rata allotment was made to all the applicants. All applications were accepted and debentures were allotted. What amount is to be refunded to the applicants?

  1. 45,000
  2. No Refund
  3. 50,000
  4. 55,000

 

In which head Debentures cannot be shown in the Balance Sheet?

  1. Equity Shareholders’ Funds
  2. Long Term Borrowings
  3. Short Term Borrowings
  4. Other Current Liabilities

 

Tamy Limited issued 5,000 debentures @ 1,000 each at a discount of 10%. Rs.300 is payable on application and balance payable on the allotment. Find the amount received on an allotment?

  1. 30,00,000
  2. 35,00,000
  3. 40,00,000
  4. 45,00,000.

 

Under which head the amount of discount which is unamortized or cannot be written off, is shown in the balance sheet?

  1. Other Non-current Assets
  2. Other Non-current Liabilities
  3. Other current assets
  4. Other current liabilities

 

Sushma Limited issued 1,000, 13% debentures of Rs.100 each at a premium of 10%. Applications were received for 900 debentures only. All applications were accepted and debentures were allotted. What amount is to be credited to the Securities Premium Account?

  1. 9,000
  2. 10,000
  3. 1,000
  4. 900

 

Which of the following statement is not correct?

  1. Debentures are completely unsafe
  2. Debenture is considered as external equity
  3. A Debenture holder is a lender
  4. Debentures can be issued at discount

 

When an instrument is issued without interest rate and the issue price is thereby discounted, the issue of such an instrument is called ________.

  1. Zero coupon Bond
  2. Light Discount bond
  3. Fixed coupon Bond
  4. Deep zero bond

 

A debenture holder has no ________.

  1. Voting Right
  2. Right for interest on debentures
  3. Right for Redemption of Debentures
  4. None of these

 

Premium on Redemption of Debentures Account is ________.

  1. Personal Account
  2. Real Account
  3. Nominal Account
  4. None of these

 

Debentures are shown in the Balance Sheet of a company under the head of

  1. Non current liabilities
  2. Current liabilities
  3. Share capital
  4. None of these

 

A Company can issue its debentures at ________.

  1. Par, Premium and Discount
  2. Par only
  3. Par and Premium only
  4. Premium and Discount only

 

Shareholders get dividend, Debenture holders get

  1. Interest
  2. Bonus
  3. Shares
  4. Profit

 

On the issue of debentures as collateral security, which account is credited?

  1. Debentures Account
  2. Bank Loan Account
  3. Debenture Holdings Account
  4. Debenture Suspense Account

[2012]

 

Vinod Limited has 5,000, 11% Debentures which are to be redeemed within the 8 months from the date of previous balance sheet. How will you show these debentures in the balance sheet?

  1. Under Other Current Liabilities
  2. Long Term Borrowings
  3. Short Term Borrowings
  4. Trade payables

 

Y Limited acquired assets of ₹100 Lakhs and took over liabilities of ₹40,00,000 from Sita Enterprises. Y Limited issued 8% Debenture of ₹100 each at a premium of 25% as purchase consideration. Calculate the number of debentures issued by the company.

  1. 48,000
  2. 60,000
  3. 45,000
  4. 40,000

 

Vinod Limited invited applications for 2,000, 11% Debentures @ 100 each. The company received an application only for 1900 debentures. What is this situation called?

  1. Under Subscription
  2. Over Subscription
  3. Full Subscription
  4. Pro-rata Allotment

 

A Debenture is an acknowledgement of debt and a contract for the repayment of the principal amount with ________.

  1. Interest
  2. Profit
  3. Dividend
  4. Premium

 

The following are the types of debentures except:

  1. Equity Debentures
  2. Redeemable debentures
  3. Perpetual Debentures
  4. Convertible debentures

 

Debentures for a longer period which are secured by either fixed charge or floating charge on assets they are called ________.

  1. Secured Debentures
  2. Unsecured Debentures
  3. Un-registered Debentures
  4. Bearer Debentures

 

How many debentures to be issued under purchase consideration are calculated. State the Formula.

  1. Purchase considerationIssue price of debenturesPurchase considerationIssue price of debentures
  2. Cash considerationIssue price of debenturesCash considerationIssue price of debentures
  3. Cash considerationIssue price of sharesCash considerationIssue price of shares
  4. Purchase considerationIssue price of sharesPurchase considerationIssue price of shares

 

Vinod Limited issued 12%, 1,000 Debentures @ 100 each at a premium of 10%. What will be the first journal entry?

  1. Bank A/c ... Dr. 1,10,000
    To 12% Debentures App. & Allot. A/c 1,10,000
    (Being Application money received)
  2. Bank A/c ... Dr. 1,00,000
    To Debentures App. & Allot. A/c 1,00,000
  3. Bank A/c ... Dr. 1,10,000
    To Debentures App. & Allot. A/c 1,00,000
    To Securities premium 10,000
  4. 12% Debentures A/c ... Dr. 1,10,000
    To Debentures App. & Allot. A/c 1,10,000

 

Vinod Limited offered 20,000 debentures @ 100 each at a premium of 10%. The issue was oversubscribed by 3 times. The company made full allotment to 4,000 applicants and pro-rata allotment made to the 36,000 applicants and remaining applications are rejected. How much amount is to be refunded by the company?

  1. 44,00,000
  2. 22,00,000
  3. 33,00,000
  4. 18,00,000

 

The debentures are issued under the ________ of company

  1. Common seal
  2. Section 12 of Companies Act
  3. Registration
  4. Rules & Principles

 

Why is a premium on the issue of debentures considered as a capital profit

  1. It is not an income arising from the normal course of business operations.
  2. It is an income arising from the normal course of business operations.
  3. It is not a loss arising from the normal course of business operations.
  4. All of these

 

While passing the entry for a refund of money if the applications are rejected. Which account should be credited:

  1. Bank A/c
  2. Debenture Application A/c
  3. Debenture Allotment A/c
  4. Securities Premium A/c

 

Interest on debentures will be paid to debenture holders ________.

  1. Whether there is profit or loss
  2. When there is profit
  3. When a company is maintaining Reserve
  4. When there is capital reserve

 

Vinod Limited invited applications for 2,000, 11% Debentures @ 100 each. The issue was oversubscribed by 5 times. What is this situation called?

  1. Over Subscription
  2. Full Subscription
  3. Under Subscription
  4. Pro-rata Allotment

 

When debentures are issued as secondary securities it is called

  1. Issue as collateral securities
  2. Issue for consideration other than cash
  3.  Issued at a discount
  4. Issued at premium

 

Debentures are generally secured by ________.

  1. A charge on asset
  2. A charge on liabilities
  3. Bank Loan
  4. Bank Overdraft

3 marks

Star Textiles Ltd. purchased assets of Modern Textiles Ltd. as under:
Land and Buildings of ₹25,00,000 at ₹40,00,000; Plant and Machinery of ₹10,00,000 for ₹7,50,000 and Furniture of ₹3,00,000 for ₹1,00,000 for purchase consideration of ₹45,00,000. Star Textiles Ltd. paid ₹3,00,000 in cash and remaining by issue of 9% Debentures of ₹500 each at a premium of 5%. Record necessary entries in the books of Star Textiles Ltd.

 

X Ltd. has 4,000 12% debentures of ₹100 each on 1st April 2018. According to the terms of issue interest on debentures is payable half-yearly on 30th September and 31st March and the rate of tax deducted at source is 10%. Pass necessary journal entries for interest on debentures for the year 2018-19.

[2020]

 

K. K. Limited obtained a loan of ₹10,00,000 from State Bank of India @ 9 % interest. The company issued ₹15,00,000 9% debentures of ₹100 each, in favour of State Bank of India as collateral security. Pass necessary Journal entries for the above transactions:

  1. When company decided not to record the issue of 9% Debentures as collateral security.
  2. When company decided to record the issue of 9% Debentures as collateral security.

[2018]

 

X Company purchased assets of the book value of ₹10,45,000 from Y Co. It was agreed that the purchase consideration be paid by issuing 14% Debentures of ₹100 each. Assume debentures have been issued

  1. at par;
  2. at a discount of 5%, and
  3. at a premium of 10%.

Give necessary journal entries in the books of X Company.

 

On 1st April 2018, King Electronics Ltd. issued 10,000, 8% Debentures of ₹100 each at a discount of 6% redeemable after 5 years. All the debentures were fully subscribed. It has a balance of ₹1,00,000 in Capital Reserve. It decided to write off a discount in the first year itself from Capital Reserve.
Pass the Journal entries for the issue of debentures and writing off the discount and prepare Discount on Issue of Debentures Account.

 

X Ltd. issued 5,000, 12% Debentures of ₹100 each at a premium of ₹5 payable as follows: 

On Application

₹30 (including premium)

On Allotment

₹40

On 1st and Final Call

The balance amount

Applications were received for 6,000 debentures and allotment was made pro-rata to all applicants. All the money were duly received. Pass necessary journal entries.

 

Distinguish between Shares and Debentures (any two).

 

What is meant by Premium on Redemption of Debentures Account?

[[NCERT Textbook]]

 

Discount or Loss on Issue of Debentures may be written off from Securities Premium Reserve. Why?

 

X Ltd. secured a loan of Rs. 80,00,000 from the Bank of America by issuing 10,000 ; 9% Debentures of Rs. 100 each as collateral security.
How will you show the issue of such debentures in the Balance Sheet?

 

Complete the following journal entries:

Date

Particulars

 

L.F.

Dr. (₹)

Cr. (₹)

2018

 

 

 

 

 

April 1

Sundry Assets A/c

Dr.

 

25,00,000

 

 

?

Dr.

 

?

 

 

To Sundry Liabilities A/c

 

 

 

7,80,000

 

To Shiv Shankar Ltd.

 

 

 

18,20,000

 

(Being Shiv Shankar Ltd. taken over by Parvati Ltd. for a purchase consideration of ₹18,20,000)

 

 

 

 

April 1

Shiv Shankar Ltd

Dr.

 

18,20,000

 

 

?

Dr.

 

?

 

 

To ?

 

 

 

20,000

 

To 8% Debentures A/c

 

 

 

?

 

(Being Shiv Shankar Ltd. paid by issuing a bill of ₹20,000 and the balance paid by issue of 8% Debentures of ₹100 each at a discount of 10%)

 

 

 

 

[2019]

 

Fill in the blanks in the following cases:

GG Ltd.
JOURNAL 

Date

Particulars

 

L.F.

Dr.(₹)

Cr.(₹)

 

________

Dr.

 

________

 

 

To ________
(Application and allotment money received on 2,000, 12% Debentures of ₹100 each issued at a premium of 5% and redeemable at a premium of 10%)

 

 

 

________

 

________

Dr.

 

_______

 

 

________

Dr.

 

________

 

 

To ________

 

 

 

________

 

To ________

 

 

 

________

 

To ________
(________)

 

 

 

________

[2016]

 

Sunflower Ltd. issued 40,00,000, 8% Debentures of ₹200 each at a premium of 6% payable as ₹80 on application and ₹132 on the allotment. Debentures are redeemable after 7 years. Record entries assuming all the money is duly received.

 

Newton Ltd. purchased a Machinery from B for ₹5,76,000 to be paid by the issue of 9% Debentures of ₹100 each at 4% discount. Journalise the transactions.

 

Hina Ltd. purchased assets of Harish Ltd. for Rs. 8,40,000 and took over the liabilities (creditors) of Rs. 80,000 for an agreed purchase consideration of Rs. 8,00,000. Hina Ltd. issued 12% debentures of Rs. 100 each at 25% premium for purchase consideration.
Pass necessary Journal entries in the books of Hina Ltd.

[2012]

 

Sudhir Ltd. took over Assets of ₹8,50,000 and Liabilities of ₹1,50,000 of Gopal Ltd. at an agreed price of ₹7,20,000. The purchase consideration was discharged by issuing 12% debentures of ₹100 each at a premium of 20%. Give journal entries in the books of Sudhir Ltd.

 

Raj Ltd. purchases furniture costing ₹2,20,000. It was agreed that the purchase consideration be paid by issue of 15% debentures of ₹100 each. Assume debentures have been issued:

  1. at par, and
  2. at a premium of 10%.

Give necessary journal entries.

 

X Ltd. purchased a building for ₹40,00,000 payable as 25% in Cash and balance by allotment of 7% debentures of ₹500 each at a premium of 20%. Give necessary journal entries.

 

Ashoka Ltd. purchased machinery costing ₹1,35,000. It was agreed that the purchase consideration be paid by issuing 12% debentures of ₹100 each. Assume debentures have been issued,

  1. at par, and
  2. at a discount of 10%.

Give necessary journal entries.

 

Romi Ltd. acquired assets of ₹20 lakhs and took over creditors of ₹2 lakhs from Kapil Enterprises. Romi Ltd. issued 8% Debentures of ₹100 each at a premium of 25% as purchase consideration. Record necessary Journal entries in the books of Romi Ltd.
[Hint: Difference between the value of assets and liabilities taken over is treated as purchase consideration.]

 

On 1st April 2018, A Ltd. issued 20,000, 10% Debentures of ₹100 each at a discount of 5% redeemable at a premium of 4% after 5 years. It decided to write off the loss on issue of debentures in the year ended 31st March 2019 first from Capital Reserve then from Securities Premium Reserve, and balance from Statement of Profit & Loss. It has the following balances:
Capital Reserve ₹1,00,000 and Securities Premium Reserve ₹50,000.
Pass the Journal entries for the issue of debentures and writing off the loss.

 

Give any three characteristics of a debenture.

 

S. Singh Limited obtained a loan of ₹5,00,000 from State Bank of India @ 10% p.a. interest. The company issued ₹7,50,000, 10% Debentures of ₹100 each in favour of State Bank of India as Collateral Security. Pass necessary Journal entries for the above transactions:

  1. When the company decided not to record the issue of 10% Debentures as Collateral Security.
  2. When the company decided to record the issue of 10% Debentures as Collateral Security.

[2019]

 

Times Sports Ltd. issued 15,000; 10% Debentures of ₹100 each on 1st April, 2018. The issue was fully subscribed. According to the terms of issue, interest is payable on half-yearly basis. Pass Journal entries for Interest on Debentures for the year ended 31st March, 2019 (Ignore TDS).

 

X Ltd. purchased assets of Y Ltd. as under:
Plant and Machinery of ₹20,00,000 at ₹18,00,000; Land and Buildings of ₹30,00,000 at ₹42,00,000 for purchase consideration of ₹55,00,000 and paid ₹10,00,000 in cash and remaining by issue of 8% Debentures of ₹100 each at a premium of 20%. Record necessary entries in the books of X Ltd.

 

Fill in the missing information in the following: 

JOURNAL 

Date

Particulars

 

L.F.

Dr. (₹)

Cr. (₹)

 

Bank A/c

Dr.

 

________

 

 

To 12% Debenture Application & Allotment A/c
(Application money received on ________ Debentures of ₹100 each issued at a discount of 10%)

 

 

 

________

 

12% Debenture Application & Allotment A/c

Dr.

 

18,00,000

 

 

Loss on issue of debentures A/c

Dr.

 

_______

 

 

To 12% debentures A/c

 

 

 

_______

 

To Premium on Redemption A/c
(Transfer of application money to Debentures Account, issued at a discount of 10% and redeemable at a premium of 5%)

 

 

 

________

 

Wellbeing Ltd. took over assets of ₹9,80,000 and liabilities of ₹40,000 of HDR Ltd. at an agreed value of ₹9,00,000. Wellbeing Ltd. paid to HDR Ltd. by issue of 9% Debentures of ₹100 each at a premium of 20%. Pass necessary Journal entries to record the above transactions in the books of Wellbeing Ltd.

 

Pass journal entries in the books of Sharda Ltd. when the Co. issued 5,000, 7% debentures of ₹100 each at a discount of 6%.

 

What is meant by Debentures issued at Discount and Redeemable at Premium?

[[NCERT Textbook]]

 

A Ltd. purchased machinery from Kiran Machines Ltd. and paid them by issuing a cheque for ₹60,000 and balance by issue of 4,000, 10% Debentures of ₹100 each at 10% premium. On the basis of this information fill the missing values in the following Journal entries:

Date

Particulars

 

L.F.

Dr. (₹)

Cr. (₹)

 

?

Dr.

 

?

 

To ?

 

 

 

?

(?)

 

 

 

 

?

Dr.

 

?

 

To ?

 

 

 

?

To ?

 

 

 

?

To ?

 

 

 

?

(?)

 

 

 

 

 

 

                                                                6 marks

On 1st April, 2015, JK Ltd issued 8,000, 9% debentures of Rs.1,000 each at a discount of 6%, redeemable at a premium of 5% after 3 years. The company closes its book on 31st March every year. Interest on 9% debentures is payable on 30th September and 31st March every year. The rate of tax deducted at source is 10%.
Pass necessary journal entries for the issue of 9% debentures and debenture interest for the year ended 31st March, 2016.

[2017]

 

  1. On 1st April, 2015, Mayfair Ltd. issued 4,000 9% debentures of ₹ 100 each at a discount of 5% redeemable at a premium of 8%. The debentures were redeemable on 31st March, 2019. The company created the necessary minimum amount of debenture redemption reserve and purchased the required amount of debenture redemption investments as per the provisions of Companies Act, 2013.
    Pass the necessary journal entries for redemption of debentures.
  2. Hero Ltd. purchased plant and machinery for ₹ 18,00,000 from Pearl Machines Ltd. payable ₹ 3,00,000 by drawing a promissory note and the balance by issue of 9% debentures of ₹ 100 each at a premium of 20%.
    Pass the necessary journal entries in the books of Hero Ltd. for the above transactions.

[2020]

 

Feeble Ltd.issued 10% Debentures at 94% for ₹ 20,00,000 on 1st July, 2013 repayable by five equal annual installments of ₹ 4,00,000 each starting from 30th June, 2014. Calculate the amount of discount to be written off in every accounting year assuming that the company decides to write off the debentures discount during the life of the debentures.

 

Best Barcode Ltd. took a loan of ₹5,00,000 from a bank giving ₹6,00,000; 9% Debentures as collateral security. Pass Journal entries regarding issue of debentures, if any, and show this loan in the Balance Sheet of the company.

 

Pass Journal entries in the following cases:

  1. A Co. Ltd. issued ₹40,000; 12% Debentures at a premium of 5% redeemable at par.
  2. A Co. Ltd. issued ₹40,000; 12% Debentures at a discount of 10% redeemable at par.
  3. A Co. Ltd. issued ₹40,000; 12% Debentures at par redeemable at 10% premium.
  4. A Co. Ltd. issued ₹40,000; 12% Debentures at a discount of 5% and redeemable at 5% premium.
  5. A Co. Ltd. issued ₹40,000; 12% Debentures at a premium of 10% redeemable at 110%.

 

A Ltd issued 2,000; 9% Debentures of ₹100 each on the following terms: ₹20 on the application; ₹20 on allotment; ₹30 on the first call; ₹30 on final call. The public applied for 2,400 debentures. Applications for 1,800 debentures were accepted in full. Applications for 400 debentures were allotted 200 debentures and applications for 200 debentures were rejected Pass necessary Journal entries.

 

Meghnath Limited took a loan of ₹1,20,000 from a bank and deposited 1,400, 8% debentures of ₹100 each as collateral security along with primary security worth ₹2 lakhs. Company again took a loan of ₹80,000 after two months from a bank and deposited 1,000, 8% debentures of ₹100 each as collateral security. Record necessary journal entries. How will you show the issue of Debentures and Bank Loan in the balance sheet of the company.

 

X Ltd. issued 25,000, 9% Debentures of ₹100 each at a premium of ₹4 per debenture on 1st April, 2017. On the same date it purchased fixed assets of ₹10,00,000 and took over current liabilities of ₹70,000 of Y Ltd. and paid ₹4,00,000 in Cash and remaining by issue of ₹5,00,000, 9% debentures at a premium 6%. On the same date it took a loan from the Bank for ₹6,00,000 and issued 9% debentures as collateral security. Give entries and the extract of Balance Sheet on 31st March, 2018. Ignore interest.

 

Pass necessary Journal entries relating to the issue of debentures for the following:

  1. Issued ₹ 28,000; 10% Debentures of ₹ 100 each at a premium of 15% redeemable at par.
  2. Issued ₹ 30,000; 10% Debentures of ₹ 100 each at a premium of 10% and redeemable at a premium of 15%.
  3. Issued ₹ 80,000; 10% Debentures of ₹ 100 each at par repayable at a premium of 10%.

 

Pass Journal entries in the following cases:

  1. A Co. Ltd. issued Rs 40,000; 12% Debentures at a premium of 5% redeemable at par.
  2. A Co. Ltd. issued Rs 40,000; 12% Debentures at a discount of 10% redeemable at par.
  3. A Co. Ltd. issued Rs 40,000; 12% Debentures at par redeemable at 10% premium.
  4. A Co. Ltd. issued Rs 40,000; 12% Debentures at a discount of 5% and redeemable at 5% premium.

 

XYZ Ltd. issued 5,000, 10% Debentures of ₹100 each on 1st April, 2015 at a discount of 10% redeemable at a premium of 10% after 4 years. Give Journal entries for the year ended 31st March, 2016, assuming that the interest was payable half-yearly on 30th September and 31st March. Tax is to be deducted @ 10%.

 

Hammer Ltd. issued ₹4,000; 10% Debentures of ₹100 each, payable ₹ 20 on the application and the balance amount on the allotment. The debentures are redeemable after 5 years. Applications were received for the issued debentures and allotment wade to all the applicants. The amount was received on due dates.
Pass the Journal entries and prepare the Balance Sheet.

 

On 1-4-2015, K.K. Ltd. issued 500, 9% Debentures of ₹500 each at a discount of 4%, redeemable at a premium of 5% after three years.
Pass necessary Journal Entries for the issue of debentures and debenture interest for the year ended 31-3-2016 assuming that interest is payable on 30th September and 31st March and the rate of tax deducted at source is 10%. The company closes its books on 31st March every year.

[2017]

 

On 1st April, 2018, Moonlight Ltd. issued 1,000, 9% Debentures of ₹200 each at a discount of 5% redeemable after 5 years at a premium of 10%. All the debentures were subscribed and allotment was made. The balance in Securities Premium Reserve is ₹10,000. Profit for the year was ₹50,000.
Pass the Journal entries for issue of debentures and writing off the loss from Securities Premium Reserve first and thereafter from profit for the year. Prepare the extract of the Balance Sheet as at 31st March, 2019.

 

SSS Ltd. issued 25,000,10% debentures of 100 each. Give journal entries and the Balance Sheet in each of the following cases when :

  1. The debentures were issued at a premium of 20%
  2. The debentures were issued as a collateral security to bank against a loan of Rs.20,00,000.
  3. The debentures were issued to a supplier of machinery costing Rs.28,00,000 as his full and final payment.

[2011]

 

On 1st June, 2017, R Energy Ltd. issued 10,000, 7% Debentures of ₹100 each at a discount of 10% redeemable at a premium of 10% at the end of five years. All the debentures were subscribed and allotment was made. Prepare the Balance Sheet (extract) as at 31st March, 2018.

 

Pass necessary Journal entries for the issue of Debentures in the following cases:

  1. ₹40,000; 15% Debentures of ₹100 each issued at a discount of 10% redeemable at par.
  2. ₹80,000; 15% Debentures of ₹100 each issued at a premium of 10% redeemable at a premium of 10%.

 

J Ltd. issued ₹20,00,000, 15% Debentures at 8% discount. Debentures are to be redeemed in the following manner:

Year-end

Face value of Debentures
₹

2

2,00,000

3

4,00,000

4

6,00,000

5

8,00,000

Pass journal entry for the issue of Debentures and prepare Discount on Issue of Debentures Account for 5 years.

 

Pass Journal entries for the issue of debentures in each of the following alternative cases:

  1. 10% Debenture of Rs 100 each issued at Rs 100, repayable at Rs 100.
  2. 10% Debenture of Rs 100 each issued at Rs 95, repayable at Rs 100.
  3. 10% Debenture of Rs 100 each issued at Rs 105, repayable at Rs 100.
  4. 10% Debenture of Rs 100 each issued at Rs 100, repayable at Rs 105.

 

Ankur Jewellery Ltd. issued 50,00,000, 8% Debentures of ₹100 each at a discount of 6% on April 1, 2012 redeemable at premium of 4% by draw of lots as under:
20,00,000 Debentures on March 31,2015
10,00,000 Debentures on March 31,2016
20,00,000 Debentures on March 31,2017
Compute the amount of discount to be written off in each year till debentures are paid. Also, prepare discount/loss on issue of debentures account.

 

  1. On 1st April, 2019 , Bright Ltd. issued ₹ 4,00,000,6 % Debentures of ₹ 100 each at a discount of 5 %, redeemable after three years.
    The amount per debenture was payable as follows:

On Application -

₹ 80 per debenture

On Allotment -

Balance
  1. The debentures were fully subscribed and all money was duly received.
  2. Pass necessary journal entries for issue of debentures.
    Disha Ltd. took over assets of ₹ 8,00,000 and liabilities of ₹ 3,00,000 from Kriti Ltd. for a purchase consideration of ₹ 6,00,000. The payment was made by issue of 9 % Debentures of ₹ 100 each at 20 % premium.

Pass the necessary journal entries for the above transactions in the books of Disha Ltd.

[2020]

 

Trupati Ltd. issued 20,000, 11% Debentures of ₹100 each, payable as follows:
₹25 on application; ₹35 on allotment and ₹40 on first and final call.
All the debentures were applied. A, the holder of 500 debentures paid the entire amount on his holding on allotment and B, the holder of 100 debentures failed to pay the allotment and final call. Pass entries.

 

  1. On 15-2-2017 A Ltd. invited applications for issue of 1,00,000, 9% debentures of ₹100 each at a discount of 6%, redeemable at par after 3 years. The full amount was payable on application and the debentures were issued on 15-3-2017. Pass the journal entries for the above transactions.
  2. R Ltd. issued 10,000, 12% Debentures of ₹100 each at a discount of 5%. Pass Journal entries.

 

Maneesh Ltd. issued 5,000, 12% debentures of ₹100 each at a discount of 6% to be redeemed as follows:
1st Year: Nil; 2nd Year: ₹2,50,000; 3rd Year: Nil; 4th Year: ₹2,50,000.
Show the Discount on Issue of Debentures Account for the period of 4 years.

 

A company issued debentures of the face value of ₹10,00,000 at a discount of 6% on 1st April, 2012. These debentures are redeemable by annual drawings of ₹2,00,000 made on 31st March each year. The directors decided to write off discount based on the debentures outstanding each year. Prepare Discount on Issue of Debentures account for five years.

 

On 1st April, 2015, V.V.L. Ltd. issued 1,000, 9% Debentures of ₹100 each at a discount of 6%, redeemable at a premium of 10% after three years. Pass necessary Journal entries for the issue of debentures and debenture interest for the year ended 31st March, 2016, assuming that interest is payable on 30th September and 31st March and the rate of tax deducted at source is 10%. The company closes its books on 31st March every year.

 

Hyatt Ltd. took loan of ₹8,00,000 from State Bank of India and issued 10,000; 9% Debentures of ₹100 each as collateral security. How will issue of debentures be shown in the Balance Sheet:

  1. When Journal entry is not passed; and
  2. When Journal entry is passed?

 

Pass the necessary journal entries for the issue of debentures for the following transactions:

  1. Anand Ltd. issued 800, 9 % Debentures of ₹ 500 each at a premium of 20 %, to the vendors for machinery purchased from them costing ₹ 4,80,000
  2. Dawar Ltd. issued 5,000, 7 % Debentures of ₹ 200 each at a premium of 5 %, redeemable at a premium of 10 %.
  3. Novelty Ltd. issued 1,000, 8 % Debentures of ₹ 100 each at a discount of 5 %, redeemable at a premium of 10 %.

[2020]

 

On 1st April, 2018, Welfare Ltd. took over assets of ₹4,50,000 and liabilities of ₹60,000 of Himalyan Ltd. for the purchase consideration of ₹4,40,000. It paid the purchase consideration by issuing 8% Debentures of ₹100 each at 10% premium. On the same date it issued another 3,000, 8% Debentures of ₹100 each at a discount of 10%, redeemable at a premium of 5% after 5 years. According to the terms of the issue ₹30 is payable on application and the balance on the allotment of debentures.
You are required to pass Journal entries in the books of Welfare Ltd. to record the above transactions.

 

A Company had ₹10,00,000, 12% Debentures outstanding as on 1st April, 2017. During the year company took a loan of ₹2,00,000 from the State Bank of India for which the Company placed with the bank debentures for ₹2,50,000 as Collateral Security. Pass journal entries, if any. Also show how the Debentures and Bank Loan will appear in the Company’s Balance Sheet as at 31st March, 2018.

 

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