Page 143 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Accounting for Companies-I

Notes To Debenture Account.
(vi) When call money is received-
Bank Account Dr.
To Debenture Call Account

Note If the issue of debentures is oversubscribed by the public, excess application money
may be retained by the company for adjustment towards allotment and respective calls. If
no debenture is allotted to the applicant, his money will be refunded and the following
journal entry will be passed.

Debenture Application Account Dr
To Bank Account

Example 1: Issue of Debentures at Par Payable in Installment and Lump Sum
Sonex Co. Limited issued 5,000; 12% Debentures of 500 each payable as under:

100 on application, 200 on allotment and balance on final call.
In addition, the company offers 2,000; 10% Debentures of 100 each and the entire amount was
payable with application.

In the case of 10% Debentures, the company received applications for 2,500 debentures.
The directors of the company made the allotment on a pro-rata basis and excess money was
refunded to the application. All the moneys were duly received. Journalise the transactions.

Solution:
Sonex Limited Journal
( ) ( )
Bank Account Dr. 5,00,000
To 12% Debenture Application Account 5,00,000
(Being the receipt of application money on 5,000; 12% debenture @ 100 per
debenture)
12% Debenture Application Account Dr. 5,00,000
To 12% Debenture Account 5,00,000
(Being application money transferred to debenture account).
12% Debenture Allotment Account Dr. 10,00,000
To 12% Debenture Account 10,00,000
(Being allotment money due on 5,000 debenture @ 200 per debenture)
Bank Account Dr. 10,00,000
To 12% Debenture Allotment Account 10,00,000
(Being receipt of allotment money on debenture)
12% Debenture Final Call Account Dr. 10,00,000
To 12% Debenture Account 10,00,000
(Being final call money due on 5000 debenture @ 200 per debenture)
Bank Account Dr. 10,00,000 Contd...

To 12% Debenture Final Call Account 10,00,000
(Being receipt of final call money on debentures)
LOVELY PROFESSIONAL UNIVERSITY
136 Bank Account Dr. 2,50,000
To 10% Debenture Application Account 2,50,000
(Being receipt of when money on 2000 debenture @ 100 each in lump sum)
10% Debenture Application Account Dr. 2,00,000
To 10% Debenture Account 2,00,000
(Being application money transferred to debenture accounts)
10% Debenture Application Account Dr. 50,000
To Bank Account 50,000
(Being excess money refunded to the applicants)