Please answer 7 ques all the parts have confusion in every part test 14 200' 2002 you State of to - Accountancy - Issue and Redemption of Debentures

Question

Please answer 7 ques all the parts have confusion in every part

Neha Chopra · Accepted Answer

Dear Student

Journal in the books of the company

Date
Particulars

Debit
Credit

a
Bank A/c
Dr
30,000

To Debenture Application A/c

30,000

(Being application money received on 300
debentures )

Debenture Application A/c
Dr
30,000

To 9% Debenture A/c

30,000

(Being Application money transferred to
9% Debenture A/c to be redeemed at par)

b
Bank A/c
Dr
32,100

To Debenture Application A/c

32,100

(Being application money received on 300
debentures )

Debenture Application A/c
Dr
32,100

To 9% Debenture A/c (300 x 100)

30,000

To Securities Premium A/c (300 x 7)

2,100

(Being Debentures issued at 7% premium to
be redeemed at par)

c
Bank A/c
Dr
27,000

To Debenture Application A/c

27,000

(Being application money received on 300
debentures )

Debenture Application A/c
Dr
27,000

Discount on issue of Debentures A/c (300
x 10)

3,000

To 9% Debenture A/c (300 x 100)

30,000

(Being Debentures issued at 10% discount
to be redeemed at par)

d
Bank A/c
Dr
32,100

To Debenture Application A/c

32,100

(Being application money received on 300
debentures )

Debenture Application A/c
Dr
32,100

Loss on Issue of Debentures A/c (300 x
4)
Dr
1,200

To 9% Debenture A/c (300 x 100)

30,000

To Securities Premium A/c (300 x 7)

2,100

To Premium on Redemption of Debentures
A/c (300 x 4)

1,200

(Being Debentures issued at 7% premium to
be redeemed at 4% Premium)

e
Bank A/c (250 x 90)
Dr
22,500

To Debenture Application A/c

22,500

(Being application money received on 250
debentures )

Debenture Application A/c
Dr
22,500

Loss on Issue of Debenture A/c (250 x 10)
+ (250 x 4)
Dr
3,500

To 9% Debenture A/c (250 x 100)

25,000

To Premium on Redemption of Debentures
A/c (250 x 4)

1,000

(Being Debentures issued at 10% discount
to be redeemed at 4% Premium)

Treatment in the balance sheet

Transaction
number
Amount to be shown in Long Term Borrowings
as Debentures
Amount to be shown as Securities Premium
in Reserve and Surplus Section of Balance sheet
Amount to be shown as Premium on
Redemption of Debentures in Other long term Liabilities
Amount to be shown as Loss on Issue of
Debentures in Other Non Current Assets
Amount to be shown as Cash and
Equivalents

a
30,000
-
-
-
30,000

b
30,000
2,100
-
-
32,100

c
30,000
-
-
3,000
27,000

d
30,000
2,100
1,200
1,200
32,100

e
25,000
-
1,000
3,500
22,500

Please note that balance sheet hasnt been prepared for each
transaction as the treatment can be understood by the above
table

Regards

Journal in the books of the company
Date	Particulars		Debit	Credit

a	Bank A/c	Dr.	30,000
	To Debenture Application A/c			30,000
	(Being application money received on 300 debentures )

	Debenture Application A/c	Dr.	30,000
	To 9% Debenture A/c			30,000
	(Being Application money transferred to 9% Debenture A/c to be redeemed at par)


b	Bank A/c	Dr.	32,100
	To Debenture Application A/c			32,100
	(Being application money received on 300 debentures )

	Debenture Application A/c	Dr.	32,100
	To 9% Debenture A/c (300 x 100)			30,000
	To Securities Premium A/c (300 x 7)			2,100
	(Being Debentures issued at 7% premium to be redeemed at par)


c	Bank A/c	Dr.	27,000
	To Debenture Application A/c			27,000
	(Being application money received on 300 debentures )

	Debenture Application A/c	Dr.	27,000
	Discount on issue of Debentures A/c (300 x 10)		3,000
	To 9% Debenture A/c (300 x 100)			30,000
	(Being Debentures issued at 10% discount to be redeemed at par)


d	Bank A/c	Dr.	32,100
	To Debenture Application A/c			32,100
	(Being application money received on 300 debentures )

	Debenture Application A/c	Dr.	32,100
	Loss on Issue of Debentures A/c (300 x 4)	Dr.	1,200
	To 9% Debenture A/c (300 x 100)			30,000
	To Securities Premium A/c (300 x 7)			2,100
	To Premium on Redemption of Debentures A/c (300 x 4)			1,200
	(Being Debentures issued at 7% premium to be redeemed at 4% Premium)


e	Bank A/c (250 x 90)	Dr.	22,500
	To Debenture Application A/c			22,500
	(Being application money received on 250 debentures )

	Debenture Application A/c	Dr.	22,500
	Loss on Issue of Debenture A/c (250 x 10) + (250 x 4)	Dr.	3,500
	To 9% Debenture A/c (250 x 100)			25,000
	To Premium on Redemption of Debentures A/c (250 x 4)			1,000
	(Being Debentures issued at 10% discount to be redeemed at 4% Premium)

Treatment in the balance sheet
Transaction number	Amount to be shown in Long Term Borrowings as Debentures	Amount to be shown as Securities Premium in Reserve and Surplus Section of Balance sheet	Amount to be shown as Premium on Redemption of Debentures in Other long term Liabilities	Amount to be shown as Loss on Issue of Debentures in Other Non Current Assets	Amount to be shown as Cash and Equivalents
a	30,000	-	-	-	30,000
b	30,000	2,100	-	-	32,100
c	30,000	-	-	3,000	27,000
d	30,000	2,100	1,200	1,200	32,100
e	25,000	-	1,000	3,500	22,500