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Vibhav
Subject: Accountancy
, asked on 4/11/17
In Illustration 43 TS Grehwal part 2 page 8.51 If the operating cycle is taken to be 24 months then how will the solution change???
What will be the new solution????
Answer
3
Vibhav
Subject: Accountancy
, asked on 4/11/17
Why don't financial companies create DRR i.e. Why is there a clause in companies Act which allows Banking Institutions and All India Financial Institutions to redeem debentures without creating DRR????
Answer
1
Ipsita Chakravarty
Subject: Accountancy
, asked on 31/10/17
32
Q32. On 1
st
April, 2014, a limited company issued 250, 12% debentures of Rs. 1,000 each at Rs. 950. holders of these debentures have an option to convert their folding into 10% Preference Shares of Rs. 100 each at a premium of Rs.25 per share at any time within two years.
On 31
st
March ,2015, a year's interest had accrued on the debentures and remained unpaid. A holder of 20 debentures notified his intention to exercise the above option.
Pass necessary journal entries.
[Ans, preference Shares issued =
20
debentures
×
Rs
.
950
125
=
152
.]
Answer
1
Ipsita Chakravarty
Subject: Accountancy
, asked on 31/10/17
36 solve
Answer
1
Ipsita Chakravarty
Subject: Accountancy
, asked on 30/10/17
Q 24
. On 1st April, 2011, a Company made an issue of 5,000, 15% Debentures of Rs 100 each. The terms of issue provided for the redemption of Rs. 1,00,000 Debentures annually, commencing from 31st March, 2015, either by drawing at par or by purchase in the market at the Company's option.
Company invested the required amount on 30th April, 2014.
On 31st March, 2015, the Company purchased for cancellation 300 of its debentures at 95;200 at 96 and 250 at 98. The expenses of purchase amounted to Rs 320.
Record the redemption of debentures in the Company's Ledger including interest on debentures.
[Ans. Debenture Redemption Investment Rs. 15,000 made on 30th April, 2014 will not be encashed. Profit on Redemption transferred to Capital Reserve Rs 2,480.
Note: It is assumed that the Company has sufficient balance in DRR.
Answer
1
Ipsita Chakravarty
Subject: Accountancy
, asked on 30/10/17
Solve 23:
Q. 23. Z Ltd. Purchased for cancellation 2,000 of its own debentures of Rs 100 each of Rs. 1,86,000 and 1,000 Debentures for Rs 95,000. Expenses of purchase amounted to Rs 1,500.
Pass journal entries.
Answer
3
Ipsita Chakravarty
Subject: Accountancy
, asked on 26/10/17
Solve 45 and 46
Q45. Oberoi Ltd. took certain fixed assets for Rs.6, 30,000 from Vikram Ltd. and allotted 6,000, 12% Debentures at a premium of 5% to satisfy the purchase consideration. The Company then issued a prospectus inviting the public to subscribe to 20,000, 11% Debentures of Rs.100 each at a discount of 2%, Payable as Rs. 35 on application, Rs.23 on allotment and the balance on first and final call.
Applications were received for 16,000 debentures only. All the applications were accepted and money received except first and final call on 100 debentures. Prepare the Cash Book and the Journal.
[Ans. Cash at Bank Rs. 15,64,000. Amount received on allotment Rs. 3,68,000 and on First Call Rs.6,36,000.]
Q46. A company took a loan of Rs. 5,00,000 from State Bank of India and issued 10% debentures of Rs.8,00,000 of Rs.100 each as a collateral security. Explain how will you deal with issue of debentures in the books of company.
[C.B.S.E. Sample Paper 2010, Set II )
Answer
4
Vibhav
Subject: Accountancy
, asked on 19/10/17
Whenever Debentures are redeemed, in the journal entry for the same We never directly debit % Debentures A/c and credit Bank A/c
Rather we use an intermediary account (Debentureholders A/c) which is first debited and Bank is credited while in the next entry
% Debentures are debited while Debentureholders A/c is credited
Why do we use this intermediary A/c (Debentureholders A/c)????
Cant we pass the direct (net) entry????
Answer
1
Vibhav
Subject: Accountancy
, asked on 17/10/17
In Q11 shouldnt the redemption entry be
% Debentures DR 40,000
Premium payable on Redemption DR 4,000
To Own Debentures 38,600
To Gain on cancellation of debentures 5,400
Why isnt this entry given in the solution???
Answer
1
Vibhav
Subject: Accountancy
, asked on 16/10/17
Q. On 1st April, 2012, a company issued 4,000 , 9% Debentures of Rs. 100 each at a discount of 10% repayable at a premium of 10% . The terms of issue provided for the redemption of Rs. 40,000 debentures every year commencing from 31st March , 2014 , either by purchase from open market or by draw of lots at the company's option.
On 31st March , 2014, the company purchased for cancellation its own debentures of the face value of Rs. 32,000 at Rs. 95 per debenture and Rs. 8,000 at Rs. 90 per debenture. The expenses of purchase amounted to Rs. 1,000.
Record necessary Journal entries for redemption of 9% Debentures.
Answer
1
Vibhav
Subject: Accountancy
, asked on 16/10/17
Can the discount offered by a retailer be treated as Deferred Revenue Expenditure???
In this case the discount may attract new buyers to enter the shop and purchase/try products and if they like those products they may become regular customers of the Retailer
So discount has the potential of creating new customers for a Retailer who would make Repeat Purchases year after year
So isnt this a Deferred Revenue Expenditure???
Even Advertisement is treated as Deferred Revenue Expenditure although there is NO Guarantee that new customers would purchase the product after viewing the advertisement
Or is Advertisement a Deferred Revenue Expenditure as it involves a huge amount which if written off in 1 year will significantly reduce the profits
Answer
1
Vibhav
Subject: Accountancy
, asked on 14/10/17
Why is discount/loss on issue of debentures a Deferred Revenue Expenditure/Fictitious Asset???
How does it give a benefit which exceeds one accounting year???
Can the discount offered by a retailer be treated as Deferred Revenue Expenditure???
In this case the discount may attract new buyers to enter the shop and purchase/try products and if they like those products they may become regular customers of the Retailer
So discount has the potential of creating new customers for a Retailer who would make Repeat Purchases year after year
So isnt this a Deferred Revenue Expenditure???
Answer
1
Vibhav
Subject: Accountancy
, asked on 14/10/17
What is the journal entry for setting Off TDS payable and TDS collected
Answer
1
Vibhav
Subject: Accountancy
, asked on 13/10/17
Explain the concepts of TDS payable and TDS collected and also How and Why are these set off against each other???
Answer
2
Vibhav
Subject: Accountancy
, asked on 11/10/17
Explain the concepts of TDS payable and TDS collected and how these are off set against each other and why they are off set
Answer
1
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What will be the new solution????
Q32. On 1st April, 2014, a limited company issued 250, 12% debentures of Rs. 1,000 each at Rs. 950. holders of these debentures have an option to convert their folding into 10% Preference Shares of Rs. 100 each at a premium of Rs.25 per share at any time within two years.
On 31st March ,2015, a year's interest had accrued on the debentures and remained unpaid. A holder of 20 debentures notified his intention to exercise the above option.
Pass necessary journal entries.
[Ans, preference Shares issued = .]
Company invested the required amount on 30th April, 2014.
On 31st March, 2015, the Company purchased for cancellation 300 of its debentures at 95;200 at 96 and 250 at 98. The expenses of purchase amounted to Rs 320.
Record the redemption of debentures in the Company's Ledger including interest on debentures.
[Ans. Debenture Redemption Investment Rs. 15,000 made on 30th April, 2014 will not be encashed. Profit on Redemption transferred to Capital Reserve Rs 2,480.
Note: It is assumed that the Company has sufficient balance in DRR.
Q. 23. Z Ltd. Purchased for cancellation 2,000 of its own debentures of Rs 100 each of Rs. 1,86,000 and 1,000 Debentures for Rs 95,000. Expenses of purchase amounted to Rs 1,500.
Pass journal entries.
Q45. Oberoi Ltd. took certain fixed assets for Rs.6, 30,000 from Vikram Ltd. and allotted 6,000, 12% Debentures at a premium of 5% to satisfy the purchase consideration. The Company then issued a prospectus inviting the public to subscribe to 20,000, 11% Debentures of Rs.100 each at a discount of 2%, Payable as Rs. 35 on application, Rs.23 on allotment and the balance on first and final call.
Applications were received for 16,000 debentures only. All the applications were accepted and money received except first and final call on 100 debentures. Prepare the Cash Book and the Journal.
[Ans. Cash at Bank Rs. 15,64,000. Amount received on allotment Rs. 3,68,000 and on First Call Rs.6,36,000.]
Q46. A company took a loan of Rs. 5,00,000 from State Bank of India and issued 10% debentures of Rs.8,00,000 of Rs.100 each as a collateral security. Explain how will you deal with issue of debentures in the books of company.
[C.B.S.E. Sample Paper 2010, Set II )
Rather we use an intermediary account (Debentureholders A/c) which is first debited and Bank is credited while in the next entry
% Debentures are debited while Debentureholders A/c is credited
Why do we use this intermediary A/c (Debentureholders A/c)????
Cant we pass the direct (net) entry????
% Debentures DR 40,000
Premium payable on Redemption DR 4,000
To Own Debentures 38,600
To Gain on cancellation of debentures 5,400
Why isnt this entry given in the solution???
On 31st March , 2014, the company purchased for cancellation its own debentures of the face value of Rs. 32,000 at Rs. 95 per debenture and Rs. 8,000 at Rs. 90 per debenture. The expenses of purchase amounted to Rs. 1,000.
Record necessary Journal entries for redemption of 9% Debentures.
In this case the discount may attract new buyers to enter the shop and purchase/try products and if they like those products they may become regular customers of the Retailer
So discount has the potential of creating new customers for a Retailer who would make Repeat Purchases year after year
So isnt this a Deferred Revenue Expenditure???
Even Advertisement is treated as Deferred Revenue Expenditure although there is NO Guarantee that new customers would purchase the product after viewing the advertisement
Or is Advertisement a Deferred Revenue Expenditure as it involves a huge amount which if written off in 1 year will significantly reduce the profits
How does it give a benefit which exceeds one accounting year???
Can the discount offered by a retailer be treated as Deferred Revenue Expenditure???
In this case the discount may attract new buyers to enter the shop and purchase/try products and if they like those products they may become regular customers of the Retailer
So discount has the potential of creating new customers for a Retailer who would make Repeat Purchases year after year
So isnt this a Deferred Revenue Expenditure???