On April 1, 2020, X Ltd. issued, 30,000, 12% debenture of 100 each at premium of 10% to be redeemable at a premium of 5%, after 5 years. The entire amount was payable on application. The securities premium amount has not been utilized for any other purpose during the year.
You are required to answer the following questions: 1) Pass journal entry for allotment of debentures
ii) Pass journal entry to write off Loss on Issue of Debentures
iii) What is the amount received for debentures?
iv) Prepare Loss on Issue of Debentures Account.
v) What will be the amount of Interest on debenture for the year ended 31st March 2021?
Solution
1). Journal
2). Journal
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1). Journal
| Date | Particular | L.F | Dr | Cr |
| 1) | Bank A/c (30,000 × 110) | 33,00,000 | ||
| To Debenture Application and allotment A/c | 33,00,000 | |||
| (Being the Debentures Application money received) | ||||
| Debentures Application and allotment A/c. Dr. | 33,00,000 | |||
| Loss on issue of Debentures A/c(30,000× 5). Dr | 1,50,000 | |||
| To 12% debentures A/c(30,000 × 100) | 30,00,000 | |||
| To securities premium reserve A/c(30,000 × 10) | 3,00,000 | |||
| To premium on redemption of debentures A/c(30,000 × 5) | 1,50,000 | |||
| (Being the issue of 30,000; 12% debentures of rs 100 each at a premium of 10% and redeemable at a premium of 5%) | ||||
2). Journal
| Date | Particular | l.f | Dr | Cr |
| Securities premium reserve A/c. Dr. | 1,50,000 | |||
| To loss on issue if Debentures A/c | 1,50,000 | |||
| (Being the discount on issue of Debentures written off against securities premium reserve) | ||||