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Unit 7: Debentures: Conditions of Issue of Debentures from Redemption Point of View
Solution: Notes
Journal Entries
Date Particulars L.F. ( ) ( )
(i) Bank Account Dr. 2,00,000
To 7% Debentures Account 2,00,000
(Being the issue of 2,000, 7% Debentures at par and redeemable at par)
(ii) Bank Account Dr. 2,00,000
Loss on Issue of Debentures Account Dr. 8,000
To 7% Debentures Account 2,00,000
To Premium in Redemption of Debentures Account 8,000
(Being issue of 7% debentures at par and redeemable at premium)
(iii) Bank Account Dr. 1,90,000
Discount on Issue of Debentures Account Dr. 10,000
To 7% Debentures Account 2,00,000
(Being issue of 7% debentures at discount and redeemable at par)
(iv) Bank Account Dr. 1,90,000
Loss on Issue of Debentures Accounts Dr. 15,000
To 7% Debentures Account 2,00,000
To Premium on Redemption of Debentures Account 5,000
(Being issue of 7% debentures at discount and repayable at premium)
(v) Bank Account Dr. 2,08,000
To 7% Debentures Account 2,00,000
To Debentures premium Account 8,000
(Being issue of 7% debentures at premium and redeemable at par).
Example 2: Issue of Debentures on Different Conditions of Redemption and Presentation
in Balance Sheet
Pass the necessary journal entries in the books of the companies for the following and also show
how they would appear in the balance sheets of the companies:
(a) Sunita Limited issued at par 10,000; 15% Debentures of 500 each and redeemable at par.
(b) Sanjay Limited issued 15,000 Debentures of 500 each at a discount of 10% redeemable at
par.
(c) Ajay Limited issued 20,000; 15% Debentures of 100 each at a premium of 10% redeemable
at par.
(d) Vijay Limited issued 25,00,000; 15% Debentures of 100 each at par redeemable at 105
each.
(e) Anuj Limited issued 60,000; 15% Debentures of 100 each at a discount of 10% redeemable
at a premium of 5%.
Solution:
(a) Journal of Sunita Limited
Date Particulars L.F. ( ) ( )
Bank Account Dr. 50,00,000
To 15% Debentures Account 50,00,000
(Being issue of 15% Debentures at par and redeemable at par)
LOVELY PROFESSIONAL UNIVERSITY 155
