india ltd made the following issue of 6% deb : 1 for cash 90%, 6000 debt of - Accountancy - Issue and Redemption of Debentures

Question

india ltd made the following issue of 6% deb :
1 for cash 90%, 6000 debt of 100 each
2 1,100 debentures of 100 each to a creditor regarding machinery
costing 1,00,000 the issue of 1 & 2 are redeemable at the end
of five years at par pass the journal entreies for first year only
pls show me the journal entries

Neha Chopra · Accepted Answer

Dear Student

Question is unclear on various point - So i have taken the
assumptions as follows :
1 For Cash 90% means Debentures are issued for Discount @ 10%
2 Debentures issued to creditors are also issued at discount of
10%
3 As per companies act 2013 we know that Companies have to transfer
at least 25% of value of debentures to be redeemed to DRR , This
appropriation can be made as Lump sump or Year after year , As no
information is given in the question , it has been assumed that
this appropriation shall be done in later years

Journal

Date
Particulars

Debit Amount (Rs )
Credit Amount (Rs )

Bank A/c (6,000 x 90)
Dr
540,000

Discount on Issue of Debentures (6,000 x
10)

60,000

To 6% Debenture A/c

600,000

(Being 6,000 debentures issued for cash @
90%)

Creditor for Machinery A/c
Dr
100,000

Discount on Issue of Debenture (1,100 x
10)
Dr
11,000

To 6% Debenture A/c (1,100 x
100)

110,000

To Discount received from
creditors

1,000

(Being 1,100 debentures issued @ 90% to creditors
of machinery of Rs 1,00,000/- , Remaining Rs 1,000 is considered as
discount received from creditors)

Profit and Loss A/c
Dr
71,000

To Discount on Issue of
Debenture

71,000

(Being discount written off in Profit and Loss
account)

Hope this helps
Regards

Journal
Date	Particulars		Debit Amount (Rs.)	Credit Amount (Rs.)

	Bank A/c (6,000 x 90)	Dr.	540,000
	Discount on Issue of Debentures (6,000 x 10)		60,000
	To 6% Debenture A/c			600,000
	(Being 6,000 debentures issued for cash @ 90%)

	Creditor for Machinery A/c	Dr.	100,000
	Discount on Issue of Debenture (1,100 x 10)	Dr.	11,000
	To 6% Debenture A/c (1,100 x 100)			110,000
	To Discount received from creditors			1,000
	(Being 1,100 debentures issued @ 90% to creditors of machinery of Rs 1,00,000/- , Remaining Rs 1,000 is considered as discount received from creditors)

	Profit and Loss A/c	Dr.	71,000
	To Discount on Issue of Debenture			71,000
	(Being discount written off in Profit and Loss account)