Double Entry Book Keeping Ts Grewal Vol. II 2019 Solutions for Class 12 Commerce Accountancy Chapter 9 Issue Of Debentures are provided here with simple step-by-step explanations. These solutions for Issue Of Debentures are extremely popular among Class 12 Commerce students for Accountancy Issue Of Debentures Solutions come handy for quickly completing your homework and preparing for exams. All questions and answers from the Double Entry Book Keeping Ts Grewal Vol. II 2019 Book of Class 12 Commerce Accountancy Chapter 9 are provided here for you for free. You will also love the ad-free experience on Meritnation’s Double Entry Book Keeping Ts Grewal Vol. II 2019 Solutions. All Double Entry Book Keeping Ts Grewal Vol. II 2019 Solutions for class Class 12 Commerce Accountancy are prepared by experts and are 100% accurate.
Page No 9.51:
Question 1:
Vishwas Ltd. issued 2,000; 9% Debentures of ₹ 100 each payable as follows:
₹ 25 on application; ₹ 25 on allotment and ₹ 50 on first and final call.
Applications were received for all the debentures along with the application money did allotment was made . Call money was also received on the due date.
Pass necessary Journal entries in the books of the company.
Answer:
Books of Vishwas Ltd. |
|||||
Journal |
|||||
Date |
Particulars
|
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Bank A/c |
Dr. |
|
50,000 |
|
|
To 9% Debenture Application A/c |
|
|
50,000 |
|
|
(Debenture application money received for 2,000 debentures at Rs 25 each) |
|
|
|
|
|
|
|
|
|
|
|
9% Debenture Application A/c |
Dr. |
|
50,000 |
|
|
To 9% Debenture A/c |
|
|
50,000 |
|
|
(Debenture application money transferred to 9% Debentures A/c) |
|
|
|
|
|
|
|
|
|
|
|
9% Debenture Allotment A/c |
Dr. |
|
50,000 |
|
|
To 9% Debentures A/c |
|
|
50,000 |
|
|
(Debenture allotment money due on 2,000 Debentures at Rs 25 each) |
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
50,000 |
|
|
To 9% Debenture Allotment A/c |
|
|
50,000 |
|
|
(Debenture allotment money received) |
|
|
|
|
|
|
|
|
|
|
|
9% Debenture First and Final Call A/c |
Dr. |
|
1,00,000 |
|
|
To 9% Debentures A/c |
|
|
1,00,000 |
|
|
(Debenture first and final call money due on 2,000 debentures at Rs 50 each) |
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
1,00,000 |
|
|
To 9% Debenture First and Final Call A/c |
|
|
1,00,000 |
|
|
(Debenture first and final call received) |
|
|
|
Page No 9.51:
Question 2:
A Ltd . issued 2,000; 9% Debentures of ₹ 100 each on the following terms:
₹20 on applications ;₹ 20 on allotment ; ₹ 30 on first call ; ₹ 30 on final call.
The public applied for 2,400 debentures. Applications for 1,800 debentures were accepted in full. Applications for 400 debentures were allotted 200 debentures and applications for 200 debentures were rejected . Pass necessary Journal entries .
Answer:
Books of A Ltd. |
|||||
Journal |
|||||
Date |
Particular |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Bank A/c |
Dr. |
|
48,000 |
|
|
To 9% Debenture Application A/c |
|
|
48,000 |
|
|
(Debenture application money received for 2,400 debentures at Rs 20 each) |
|
|
|
|
|
|
|
|
|
|
|
9% Debenture Application A/c |
Dr. |
|
48,000 |
|
|
To 9% Debentures A/c |
|
|
40,000 |
|
|
To 9% Debentures Allotment A/c |
|
|
4,000 |
|
|
To Bank A/c |
|
|
4,000 |
|
|
(Debenture application money transferred to 9% Debenture account for 2,000 Debenture, adjusted to Debenture Allotment account for 200 Debentures and money refunded for 200 debentures) |
|
|
|
|
|
|
|
|
|
|
|
9% Debenture Allotment A/c |
Dr. |
|
40,000 |
|
|
To 9% Debentures A/c |
|
|
40,000 |
|
|
(Debenture allotment money due on 2,000 debentures at Rs 20 each) |
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
36,000 |
|
|
To 9% Debentures Allotment A/c |
|
|
36,000 |
|
|
(Debenture allotment money received) |
|
|
|
|
|
|
|
|
|
|
|
Debenture First Call A/c |
Dr. |
|
60,000 |
|
|
To 9% Debentures A/c |
|
|
60,000 |
|
|
(Debenture first call money due on 2,000 9% debenture at Rs 30 each) |
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
60,000 |
|
|
To Debenture First Call A/c |
|
|
60,000 |
|
|
(Debenture first call money received) |
|
|
|
|
|
|
|
|
|
|
|
Debenture Final Call A/c |
Dr. |
|
60,000 |
|
|
To 9% Debentures A/c |
|
|
60,000 |
|
|
(Debentures final call money due on 2,000 9% Debentures at Rs 30 each) |
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
60,000 |
|
|
To Debenture Final Call A/c |
|
|
60,000 |
|
|
(Debenture final call received on 2,000 9% Debenture at Rs 30 each) |
|
|
|
|
|
|
|
|
|
Page No 9.51:
Question 3:
ABC Ltd. issued 40,000; 10% Debentures of ₹ 100 each at par for cash payable in full along with the application. Applications were received for 60,000 debentures . Debentures were allotted and excess application money was refunded. Pass Journal entries in the books of the company.
Answer:
Journal |
|||||
Date |
ABCParticulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
Bank A/c (60,000 100) |
Dr. |
|
60,00,000 |
|
|
To Debenture Application and Allotment A/c |
|
|
|
60,00,000 |
|
(Received application money on 60,000 Debenture) |
|
|
|
|
|
|
|
|
|
|
|
Debenture Application and Allotment A/c |
Dr. |
|
60,00,000 |
|
|
To 10% Debentures A/c (40,000 100) |
|
|
|
40,00,000 |
|
To Bank A/c |
|
|
|
20,00,000 |
|
(Application money transferred to Debentures A/c) |
|
|
|
|
|
|
|
|
|
|
Page No 9.52:
Question 4:
Narain Laxmi Ltd. invited applications for issuing 7,500; 12% Debentures of ₹ 100 each at a premium of ₹ 35 per debenture . The full amount was payable on application. Applications were received for 10,000 Debentures. Allotment was made to all the applications on pro rata.
Pass necessary Journal entries for the above transactions in the books of Narain Laxmi Ltd.
Answer:
In the Books of Narain Laxmi Ltd. Journal |
|
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
||
|
Bank A/c (10,000 debentures × 135) |
Dr. |
|
13,50,000 |
|
|
|
To Debenture Application and Allotment A/c |
|
|
|
13,50,000 |
|
|
(Application money received on 10,000 12% debenture) |
|
|
|
||
|
|
|
|
|
||
|
Debenture Application and Allotment A/c |
Dr. |
|
13,50,000 |
|
|
|
To 12% Debentures A/c |
|
|
|
7,50,000 |
|
|
To Securities Premium Reserve A/c |
|
|
|
2,62,500 |
|
|
To Bank A/c |
|
|
|
3,37,500 |
|
|
(7,500; 12% Debentures of Rs 100 each issued at a premium of Rs 35 and excess money refunded) |
|
|
|
||
|
|
|
|
|
|
|
Page No 9.52:
Question 5:
Raj Ltd . issued 5,000; 8% Debentures of ₹ 100 each at a premium of 5% payable as follows:
₹ 10 on application ; ₹ 20 along with premium on allotment and balance on first and final call.
Pass necessary Journal entries.
Answer:
Books of Raj Ltd. |
|||||
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Bank A/c |
Dr. |
|
50,000 |
|
|
To 8% Debenture Application A/c |
|
|
50,000 |
|
|
(Debenture application money received for 5,000 debentures at Rs 10 each) |
|
|
|
|
|
|
|
|
|
|
|
8% Debenture Application A/c |
Dr. |
|
50,000 |
|
|
To 8% Debentures A/c |
|
|
50,000 |
|
|
(Debenture application money transferred to 8% Debentures A/c) |
|
|
|
|
|
|
|
|
|
|
|
8% Debenture Allotment A/c |
Dr. |
|
1,00,000 |
|
|
To 8% Debentures A/c |
|
|
75,000 |
|
|
To Securities Premium A/c |
|
|
25,000 |
|
|
(Debenture allotment due on 5,000 8% Debentures at Rs 20 including premium of Rs 5) |
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
1,00,000 |
|
|
To 8% Debentures Allotment A/c |
|
|
1,00,000 |
|
|
(Debenture allotment money received) |
|
|
|
|
|
|
|
|
|
|
|
8% Debentures First and Final Call A/c |
Dr. |
|
3,75,000 |
|
|
To 8% Debenture A/c |
|
|
3,75,000 |
|
|
(Debenture first and final call due on 5,000 Debentures at Rs 75 each) |
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
3,75,000 |
|
|
To 8% Debenture First and Final Call A/c |
|
|
3,75,000 |
|
|
(Debenture first and final call received) |
|
|
|
|
|
|
|
|
|
Page No 9.52:
Question 6:
Nipa Limited issued ₹ 10,00,000 Debentures of ₹ 100 each at a premium of 10% , payable 25% on application (including premium) and the balance on allotment . The debentures were applied for and the amount was dully received.
You are required to give Journal entries and prepare Cash Book.
Answer:
Face Value of Debenture = Rs 100
Premium (Rs 100 × 10%) = Rs 10
∴ Issue Price = Rs 110
Amount Payable as:
On Application (25%) |
Rs 25 including premium of Rs 10 (i.e. Rs 10 + 15) |
On Allotment (85%) |
Rs 85 per debenture |
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Debenture Application A/c |
Dr. |
|
2,50,000 |
|
|
To Debentures A/c |
|
|
1,50,000 |
|
|
To Securities Premium A/c |
|
|
1,00,000 |
|
|
(Debenture application money received for 10,000 debentures at Rs 25 including premium of Rs10 each transferred to debenture account) |
|
|
|
|
|
|
|
|
|
|
|
Debenture Allotment A/c |
Dr. |
|
8,50,000 |
|
|
To Debentures A/c |
|
|
8,50,000 |
|
|
(Debentures allotment due on 10,000 Debentures at Rs 85 each) |
|
|
|
|
|
|
|
|
|
|
Cash Book |
|||||||
Dr. |
|
Cr. |
|||||
Date |
Particulars |
L.F. |
Bank Rs |
Date |
Particulars |
L.F. |
Bank Rs |
|
Debenture Application |
|
2,50,000 |
|
|
|
|
|
Debenture Allotment |
|
8,50,000 |
|
|
|
|
|
|
|
|
|
Balance c/d |
|
11,00,000 |
|
|
|
11,00,000 |
|
|
|
11,00,000 |
|
|
|
|
|
|
|
|
Page No 9.52:
Question 7:
Alok Ltd. issued 7,000, 10% Debentures of ₹ 500 each at a premium of ₹ 50 per debenture redeemable at a premium of 10% after 5 years. According to the terms of issue, ₹ 200 was payable on application and balance on allotment.
Record necessary Journal entries at the time of issue of 10% Debentures.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
Bank A/c (7,000200) |
Dr. |
|
14,00,000 |
|
|
To Debenture Application A/c |
|
|
|
14,00,000 |
|
(Received application money on 7,000 debentures) |
|
|
|
|
|
|
|
|
|
|
|
Debenture Application A/c |
Dr. |
|
14,00,000 |
|
|
To 10% Debentures A/c |
|
|
|
14,00,000 |
|
(Transfer of application money to Debentures A/c) |
|
|
|
|
|
|
|
|
|
|
|
Debenture Allotment A/c (7,000350) |
Dr. |
|
24,50,000 |
|
|
Loss on issue of Debentures A/c (7,00050) |
Dr. |
|
3,50,000 |
|
|
To 10% Debentures A/c (7,000300) |
|
|
|
21,00,000 |
|
To Securities Premium Reserve A/c (7,00050) |
|
|
|
3,50,000 |
|
To Premium on Redemption of Debentures A/c(7,00050) |
|
|
|
3,50,000 |
|
(Allotment due on 7,000 Debentures at a premium of Rs 50 per debentures and redeemable at premium of 10%) |
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
24,50,000 |
|
|
To Debenture Allotment A/c |
|
|
|
24,50,000 |
|
(Allotment money received) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page No 9.52:
Question 8:
Vijay Laxmi Ltd. invited applications for 10,000; 12% Debentures of ₹ 100 each at a premium of ₹ 70 per debenture .The full amount was payable on application.
Applications were received for 13,500 debentures. Applications for 3,500 debentures were rejected and application money was refunded . Debentures were allotted to the remaining applications .
Answer:
In the Books of Vijay Laxmi Ltd. Journal |
|
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
||
|
Bank A/c |
Dr. |
|
22,95,000 |
|
|
|
To Debenture Application and Allotment A/c |
|
|
|
22,95,000 |
|
|
(Application money received on 13,500 12% debenture) |
|
|
|
||
|
|
|
|
|
||
|
Debenture Application and Allotment A/c |
Dr. |
|
22,95,000 |
|
|
|
To 12% Debentures A/c |
|
|
|
10,00,000 |
|
|
To Securities Premium Reserve A/c |
|
|
|
7,00,000 |
|
|
To Bank A/c |
|
|
|
5,95,000 |
|
|
(10,000; 12% Debentures issued at a premium of Rs 70 and excess money refunded) |
|
|
|
||
|
|
|
|
|
||
Page No 9.52:
Question 9:
Iron Products Ltd. issued 5,000; 9% Debentures of ₹ 100 each at a premium of ₹ 40 payable as follows;
(i) ₹ 40 , including premium of ₹ 10 on applications;
(ii) ₹ 45, including premium of ₹ 15 on allotment ; and
(iii) Balance as first and final call.
The issue was subscribed and allotment made. Calls were made and due amount was received .
Pass Journal entries .
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
Bank A/c (5,000×40) |
Dr. |
|
2,00,000 |
|
|
To Debenture Application A/c |
|
|
|
2,00,000 |
|
(Application money received) |
|
|
|
|
|
|
|
|
|
|
|
Debenture Application A/c |
Dr. |
|
2,00,000 |
|
|
To 9% Debentures A/c (5,000×30) |
|
|
|
1,50,000 |
|
To Security Premium Reserve A/c (5,000×10) |
|
|
|
50,000 |
|
(Application money adjusted) |
|
|
|
|
|
|
|
|
|
|
|
Debenture Allotment A/c (5,000×45) |
Dr. |
|
2,25,000 |
|
|
To 9% Debentures A/c (5,000×30) |
|
|
|
1,50,000 |
|
To Security Premium Reserve A/c (5,000×15) |
|
|
|
75,000 |
|
(Allotment money due) |
|
|
|
|
|
|
|
|
|
|
|
Bank A/c (5,000×45) |
Dr. |
|
2,25,000 |
|
|
To Debenture Allotment A/c |
|
|
|
2,25,000 |
|
(Allotment money received) |
|
|
|
|
|
|
|
|
|
|
|
Debenture First and Final call A/c (5,000×55) |
Dr. |
|
2,75,000 |
|
|
To 9% Debentures A/c (5,000×40) |
|
|
|
2,00,000 |
|
To Security Premium Reserve A/c (5,000×15) |
|
|
|
75,000 |
|
(First call money due) |
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
2,75,000 |
|
|
To Debenture Final and Final call A/c |
|
|
|
2,75,000 |
|
(First Call money Received) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page No 9.52:
Question 10:
X Ltd . issued 12,000; 8% Debentures of ₹ 100 each at a discount of 5% payable as 25% on application;20% on allotment and balance after three months.
Pass Journal entries.
Answer:
Face Value of Debenture = Rs 100
Discount (Rs 100 × 5%) = Rs 5
∴ Issue Price = Rs 95
Amount Payable as:
On Application (25%) |
Rs 25 per debenture |
On Allotment (20%) |
Rs 20 (25 – 5) per debenture |
On First and Final Call (50%) |
Rs 50 per debenture |
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Bank A/c |
Dr. |
|
3,00,000 |
|
|
To 8% Debenture Application A/c |
|
|
3,00,000 |
|
|
(Application money received for 12,000 8% Debentures at Rs 25 each) |
|
|
|
|
|
|
|
|
|
|
|
8% Debenture Application A/c |
Dr. |
|
3,00,000 |
|
|
To 8% Debentures A/c |
|
|
3,00,000 |
|
|
(Debenture application money transferred to 8% Debentures account) |
|
|
|
|
|
|
|
|
|
|
|
8% Debentures Allotment A/c |
Dr. |
|
2,40,000 |
|
|
Discount on Issue of Debentures A/c |
Dr. |
|
60,000 |
|
|
To 8% Debentures A/c |
|
|
3,00,000 |
|
|
(Allotment money due on 12,000 8% Debentures at Rs 20 each at discount of Rs 5) |
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
2,40,000 |
|
|
To 8% Debenture Allotment A/c |
|
|
2,40,000 |
|
|
(Allotment money received) |
|
|
|
|
|
|
|
|
|
|
|
8% Debenture First and Final Call A/c |
Dr. |
|
6,00,000 |
|
|
To 8% Debentures A/c |
|
|
6,00,000 |
|
|
(First and final call money due on 12,000 8% Debentures at Rs 50 each) |
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
6,00,000 |
|
|
To 8% Debentures First and Final Call A/c |
|
|
6,00,000 |
|
|
(First and Final call money received) |
|
|
|
|
|
|
|
|
|
Page No 9.52:
Question 11:
Alka Ltd . issued 5,000, 10% Debentures of ₹ 1,000 each at a discount of 10% redeemable at a premium of 5% after 5 years . According to the terms of issue ₹ 500 was payable on application and the balance amount on allotment of debentures. Record necessary entries regarding issue of 10% Debentures.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
Bank A/c (5,000500) |
Dr. |
|
25,00,000 |
|
|
To Debenture Application A/c |
|
|
|
25,00,000 |
|
(Received application money on 5,000 debentures) |
|
|
|
|
|
|
|
|
|
|
|
Debenture Application A/c |
Dr. |
|
25,00,000 |
|
|
To 10% Debentures A/c |
|
|
|
25,00,000 |
|
(Transfer of application money to Debentures A/c) |
|
|
|
|
|
|
|
|
|
|
|
Debenture Allotment A/c (5,000400) |
Dr. |
|
20,00,000 |
|
Discount on issue of Debentures A/c (5,000100) | 5,00,000 | ||||
|
Loss on issue of Debentures A/c (5,00050) |
Dr. |
|
2,50,000 |
|
|
To 10% Debentures A/c (5,000500) |
|
|
|
25,00,000 |
|
To Premium on Redemption of Debentures A/c (5,00050) |
|
|
|
2,50,000 |
|
(Allotment due on 5,000 Debentures at a discount of Rs 100 per debentures and redeemable at premium of 5%) |
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
20,00,000 |
|
|
To Debenture Allotment A/c |
|
|
|
20,00,000 |
|
(Allotment money received) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page No 9.52:
Question 12:
Amrit Ltd . was promoted by Amrit and Bhaskar with an authorised capital of ₹ 10,00,000 divide into 1,00,000 shares of ₹ 10 each.
The company decided to issue 1,000,6% Debentures of ₹ 100 each to Amrit and Bhaskar each for their services in incorporating the company.
Pass journal entry.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
|
|
|
|
|
|
Incorporation Cost A/c (2,000 × 100) |
Dr. |
|
2,00,000 |
|
|
To 6% Debentures A/c |
|
|
|
2,00,000 |
|
( Debentures issued to promoters) |
|
|
|
|
|
|
|
|
|
|
Page No 9.53:
Question 13:
Joy Ltd. company bought a Building for ₹ 9,00,000 and the consideration was paid by issuing 10% Debentures of the normal (face) value of ₹ 100 each at a discount of 10%.
Give Journal entries.Answer:
Books of Joy Limited |
|||||
Date |
Particulars |
L.F. |
Debit Amount (₹) |
Credit Amount (₹) |
|
|
Building A/c |
Dr. |
|
9,00,000 |
|
|
To Vendor A/c |
|
|
9,00,000 |
|
|
(Building purchased) |
|
|
|
|
|
|
|
|
|
|
|
Vendor A/c |
Dr. |
|
9,00,000 |
|
|
Discount on Issue of Debentures A/c |
Dr. |
|
1,00,000 |
|
|
To 10% Debentures A/c |
|
|
10,00,000 |
|
|
(Issued 10,000, 10% debentures at 10% discount) |
|
|
|
|
|
|
|
|
|
Working Note:
Page No 9.53:
Question 14:
Wye Ltd . purchased an established business for ₹ 2,00,000 payable as ₹ 65,000 by cheque and the balance by issuing 9% Debentures of ₹ 100 each at a discount of 10%.
Give journal entries in the books of Wye Ltd.
Answer:
Books of Wye Ltd. |
|||||
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Sundry Assets A/c |
Dr. |
|
2,00,000 |
|
|
To Vendor A/c |
|
|
2,00,000 |
|
|
(Business purchased) |
|
|
|
|
|
|
|
|
|
|
|
Vendor A/c |
Dr. |
|
65,000 |
|
|
To Bank A/c |
|
|
65,000 |
|
|
(Amount paid to Vendor in cash) |
|
|
|
|
|
|
|
|
|
|
|
Vendor A/c |
Dr. |
|
1,35,000 |
|
|
Discount on Issue of Debentures A/c |
Dr. |
|
15,000 |
|
|
To 9% Debentures A/c |
|
|
1,50,000 |
|
|
(Issued 1,500 debentures at 10% discount) |
|
|
|
|
|
|
|
|
|
Working Note:
Page No 9.53:
Question 15:
Newton Ltd. purchased a Machinery from B for ₹ 5,76,000 to be paid by the issue of 9% Debentures of ₹ 100 each at 4% discount. Journalise the trasactions.
Answer:
Books of Newton Ltd. |
|||||
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Machinery A/c |
Dr. |
|
5,76,000 |
|
|
To B |
|
|
5,76,000 |
|
|
(Machinery purchased from B) |
|
|
|
|
|
|
|
|
|
|
|
B |
Dr. |
|
5,76,000 |
|
|
Discount on Issue of Debenture A/c |
Dr. |
|
24,000 |
|
|
To 9% Debenture A/c |
|
|
6,00,000 |
|
|
(Issued 6,000 debentures at 4% discount) |
|
|
|
|
|
|
|
|
|
Working Note:
Page No 9.53:
Question 16:
Reliance Ltd. purchased machinery costing ₹ 1,35,000 . It was agreed that the purchase consideration be paid by issuing 9% Debentures of ₹ 100 each . Assume debentures have been issued
(i) at par and
(ii)at a discount of 10%.
Give necessary journal entries.
Answer:
Case 1
Books of Reliance Ltd. |
|||||
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Machinery A/c |
Dr. |
|
1,35,000 |
|
|
To Vendor A/c |
|
|
1,35,000 |
|
|
(Machinery Purchases) |
|
|
|
|
|
|
|
|
|
|
|
Vendor A/c |
Dr. |
|
1,35,000 |
|
|
To 9% Debenture A/c |
|
|
1,35,000 |
|
|
(Issued 1,350 debentures at par) |
|
|
|
|
|
|
|
|
|
Working Note:
Case 2
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Machinery A/c |
Dr. |
|
1,35,000 |
|
|
To Vendor A/c |
|
|
1,35,000 |
|
|
(Machinery purchased) |
|
|
|
|
|
|
|
|
|
|
|
Vendor A/c |
Dr. |
|
1,35,000 |
|
|
Discount on Issue of Debentures A/c |
Dr. |
|
15,000 |
|
|
To 9% Debenture A/c |
|
|
1,50,000 |
|
|
(Issued 1,500 debentures at 10% discount) |
|
|
|
|
|
|
|
|
|
Working Note:
Page No 9.53:
Question 17:
Deepak Ltd purchased furniture of ₹ 2,20,000 from M/s. Furniture Mart. 50% of the amount was paid to M/s. Furniture Mart by accepting a Bill of Exchanged and for the balance the company issued 9% Debenture of ₹ 100 each at a premium of 10% in favour of M/s. Furniture Mart.
Pass Journal entries in the books of Deepak Ltd.
Answer:
Books of Deepak Ltd. |
|||||
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Furniture A/c |
Dr. |
|
2,20,000 |
|
|
To Furniture Mart |
|
|
2,20,000 |
|
|
(Furniture purchased from Furniture Mart) |
|
|
|
|
|
|
|
|
|
|
|
Furniture Mart |
Dr. |
|
1,10,000 |
|
|
To Bills Payable A/c |
|
|
1,10,000 |
|
|
(Bill accepted from Furniture Mart against 50% payment) |
|
|
|
|
|
|
|
|
|
|
|
Furniture Mart |
Dr. |
|
1,10,000 |
|
|
To 9% Debenture A/c |
|
|
1,00,000 |
|
|
To Securities Premium A/c |
|
|
10,000 |
|
|
(Issued 1,000 9% Debentures of Rs 100 each at a premium of 10% to Furniture Mart) |
|
|
|
|
|
|
|
|
|
Working Note:
Page No 9.53:
Question 18:
Bright Ltd. took over the assets of ₹ 6,60,000 and liabilities of ₹ 80,000 of Star Ltd. for an agreed purchase consideration of ₹ 6,00,000 payable 10% in cash and the balance by the issue of 12% Debentures of ₹ 100 each. Give necessary Journal entries in the books of Bright Ltd., assuming that:
Case (a): The debentures are issued at par.
Case (b): The debentures are issued at 20% premium.
Case (c): The debentures are issued at 10% discount.
Answer:
Books of Bright Ltd. |
|||||
Date |
Particulars |
L.F. |
Debit Amount (₹) |
Credit Amount (₹) |
|
|
Assets A/c |
Dr. |
|
6,60,000 |
|
|
Goodwill A/c(Balancing Figure) |
Dr. |
|
20,000 |
|
|
To Liabilities A/c |
|
|
|
80,000 |
|
To Star Ltd. |
|
|
|
6,00,000 |
|
(Purchase of business of Star Ltd.) |
|
|
|
|
|
|
|
|
60,000 |
|
|
Star Ltd. |
Dr. |
|
|
60,000 |
|
To Cash A/c |
|
|
|
|
|
(Payment made in cash) |
|
|
|
|
|
|
|
|
|
|
(a) |
Star Ltd. |
Dr. |
|
5,40,000 |
|
|
To 12% Debentures A/c |
|
|
|
5,40,000 |
|
( Purchase consideration discharged by issue of 12% Debentures) |
|
|
|
|
|
|
|
|
|
|
(b) |
Star Ltd. |
Dr. |
|
5,40,000 |
|
|
To 12% Debentures A/c |
|
|
|
4,50,000 |
|
To Security Premium Reserve A/c |
|
|
|
90,000 |
|
( Purchase consideration discharged by issue of 12% Debentures) |
|
|
|
|
|
|
|
|
|
|
(c) |
Star Ltd. |
Dr. |
|
5,40,000 |
|
|
Discount on Issue of Debentures A/c |
Dr. |
|
60,000 |
|
|
To 12% Debentures A/c |
|
|
|
6,00,000 |
|
( Purchase consideration discharged by issue of 12% Debentures) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working Note:
Page No 9.53:
Question 19:
Star Ltd. took over the assets of ₹ 6,60,000 and liabilities of ₹ 80,000 of Moon Ltd. for ₹ 6,00,000. Give necessary Journal entries in the books of Star Ltd. assuming that:
Case (a): The purchase consideration was payable 10% in cash and the balance in 5,400; 12% Debentures of ₹ 100 each.
Case (b): The purchase consideration was payable 10% in cash and the balance in 4,500; 12% Debentures of ₹ 100 each issued at 20% premium.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (₹) |
Credit Amount (₹) |
|
|
Assets A/c |
Dr. |
|
6,60,000 |
|
|
Goodwill A/c (Balancing Figure) |
Dr. |
|
20,000 |
|
|
To Liabilities A/c |
|
|
|
80,000 |
|
To Moon Ltd. |
|
|
|
6,00,000 |
|
(Purchase of business took over) |
|
|
|
|
|
|
|
|
|
|
a. |
Moon Ltd. |
Dr. |
|
6,00,000 |
|
|
To Cash A/c |
|
|
|
60,000 |
|
To 12% Debentures A/c |
|
|
|
5,40,000 |
|
(Purchase consideration discharged) |
|
|
|
|
|
|
|
|
|
|
b. |
Moon Ltd. |
Dr. |
|
6,00,000 |
|
|
To Cash A/c |
|
|
|
60,000 |
|
To 12% Debentures A/c |
|
|
|
4,50,000 |
|
To Security Premium Reserve A/c |
|
|
|
90,000 |
|
( Purchase consideration discharged) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page No 9.54:
Question 20:
Romi Ltd. acquired assets of ₹ 20 lakhs and took over creditors of ₹ 2 lakhs from Kapil Enterprises.
Romi Ltd. issued 8% Debentures of ₹ 100 each at a discount of 25% as purchase consideration.
Record necessary journal entries in the books of Romi Ltd.
Answer:
Books of Romi Ltd. |
|||||
Journal |
|||||
Date |
Particular |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Assets A/c |
Dr. |
|
20,00,000 |
|
|
To Creditors A/c |
|
|
2,00,000 |
|
|
To Kapil Enterprises |
|
|
18,00,000 |
|
|
(Asset purchased and Creditors took over from Kapil Enterprises) |
|
|
|
|
|
|
|
|
|
|
|
Kapil Enterprises A/c |
Dr. |
|
18,00,000 |
|
|
To 8% Debentures A/c |
|
|
14,40,000 |
|
|
To Securities Premium A/c |
|
|
3,60,000 |
|
|
(Issued 14,400 8% Debentures of Rs 100 each at a premium of 25% to Kapil Enterprises) |
|
|
|
|
|
|
|
|
|
Working Note:
Page No 9.54:
Question 21:
Romi Ltd. acquired assets of ₹ 20 lakhs and took over creditors of ₹ 2 lakhs from Kapil Enterprises.
Romi Ltd. issued 8% Debentures of ₹ 100 each at a discount of 10% as purchase consideration.
Record necessary journal entries in the books of Romi Ltd.
Answer:
Books of Romi Ltd. |
|||||
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Assets A/c |
Dr. |
|
20,00,000 |
|
|
To Creditors A/c |
|
|
2,00,000 |
|
|
To Kapil Enterprises |
|
|
18,00,000 |
|
|
(Assets purchased and Creditors took over from Kapil Enterprises) |
|
|
|
|
|
|
|
|
|
|
|
Kapil Enterprises |
Dr. |
|
18,00,000 |
|
|
Discount on Issue of Debentures A/c |
Dr. |
|
2,00,000 |
|
|
To 8% Debentures A/c |
|
|
20,00,000 |
|
|
(Issued 20,000 8% Debentures of Rs 100 each at discount of 10% to Kapil Enterprises) |
|
|
|
|
|
|
|
|
|
Working Note:
Page No 9.54:
Question 22:
Exe Ltd. purchased the assets of the book value ₹4,00,000 and took over the liabilities of ₹ 50,000 from Mohan Bros.It was agreed that the purchase consideration ,settled at ₹3,80,000 be paid by issuing debentures of ₹ 100 each.
Pass journal entries if debenture are issued:
(a) at par
(b) at a discount of 10% and
(c) at a premium of 10%.
It was agreed that any fraction of debentures be paid in cash.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Assets A/c |
Dr. |
|
4,00,000 |
|
|
Goodwill A/c (balancing figure) |
Dr. |
|
30,000 |
|
|
To Liabilities A/c |
|
|
50,000 |
|
|
To Mohan Bros. A/c |
|
|
3,80,000 |
|
|
(Asset and liabilities purchased from Mohan Bros.) |
|
|
|
|
|
|
|
|
|
Case 1 When Debentures are issued at Par
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Mohan Bros. |
Dr. |
|
3,80,000 |
|
|
To Debenture A/c |
|
|
3,80,000 |
|
|
(Issued 3,800 debentures at par) |
|
|
|
|
|
|
|
|
|
Working Note:
Case 2 When Debentures are issued at 10% discount
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Mohan Bros. |
Dr. |
|
3,80,000 |
|
|
Discount on issue of Debenture A/c |
Dr. |
|
42,220 |
|
|
To Debenture A/c |
|
|
4,22,200 |
|
|
To Bank A/c |
|
|
20 |
|
|
(Issued 4,222 Debentures of Rs 100 each at 10% discount to Mohan Bros. and fraction of debentures is paid in cash)
|
|
|
|
|
|
|
|
|
|
Working Note:
Case 3 When Debentures are issued at 10% premium
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Mohan Bros. |
Dr. |
|
3,80,000 |
|
|
To Debenture A/c |
|
|
3,45,400 |
|
|
To Securities Premium A/c |
|
|
34,540 |
|
|
To Bank A/c |
|
|
60 |
|
|
(Issued 3,454 Debentures of Rs 100 each at 10% premium to Mohan Bros. and fraction of debentures is paid in cash) |
|
|
|
|
|
|
|
|
|
Working Note:
Page No 9.54:
Question 23:
R Ltd. purchased the assets of S Ltd. for ₹5,00,000. It also agreed to take over the liabilities of S Ltd. amounted to ₹ 2,00,000 for a purchase consideration of ₹2,80,000 . The payment of S Ltd. was made by issue of 9% Debentures of ₹ 100 each at par.
Pass necessary journal entries in the books of R Ltd.
Answer:
Books of R Ltd. |
|||||
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Assets A/c |
Dr. |
|
5,00,000 |
|
|
To Liabilities A/c |
|
|
2,00,000 |
|
|
To S Ltd. |
|
|
2,80,000 |
|
|
To Capital Reserve A/c (balancing figure) |
|
|
20,000 |
|
|
(Asset purchased and liabilities took over from S Ltd.) |
|
|
|
|
|
|
|
|
|
|
|
S Ltd. |
Dr. |
|
2,80,000 |
|
|
To 9% Debentures A/c |
|
|
2,80,000 |
|
|
(Issued 2,800 9% Debentures of Rs 100 each) |
|
|
|
|
|
|
|
|
|
Working Note:
Page No 9.54:
Question 24:
Green Ltd. purchased the assets of Strong Ltd. for ₹ 40,00,000 and took over liabilities of 7,00,000 at an agreed value of ₹ 32,40,000. Payment was made by issuing 10% Debentures of 100 each at a discount of 10%. Pass the necessary Journal entries in the books of Green Ltd.
Answer:
In the books of Green Ltd. Journal |
|||||
Date |
Particulars |
|
L.F. |
Debit |
Credit |
|
Sundry Assets A/c |
Dr. |
40,00,000 |
|
|
|
To Sundry Liabilities A/c |
|
|
7,00,000 |
|
|
To Strong Ltd. |
|
|
32,40,000 |
|
|
To Capital Reserve A/c |
|
|
60,000 |
|
|
(Being the purchase of business of Strong Ltd.) |
|
|
|
|
|
|
|
|
||
|
Strong Ltd. A/c |
Dr. |
32,40,000 |
|
|
|
Discount on Issue of Debentures A/c (36,000×10) |
Dr. |
3,60,000 |
|
|
|
To 10% Debentures A/c |
|
|
36,00,000 |
|
|
(Being 36,000, 10% debentures issued as purchase consideration) |
|
|
|
Working Notes:
Number of Debentures issued= (32,40,000/90) = 36,000 debentures
Page No 9.54:
Question 25:
Wellbeing Ltd. took over assets of ₹ 9,80,000 and liabilities of ₹ 40,000 of HDR Ltd. at an agreed value of ₹ 9,00,000. Wellbeing Ltd. paid to HDR Ltd. by issue of 9% Debentures of ₹ 100 each at a premium of 20%. Pass necessary Journal entries to record the above transactions in the books of Wellbeing Ltd.
Answer:
In the books of Wellbeing Ltd. Journal |
|||||
Date |
Particulars |
|
L.F. |
Debit |
Credit |
|
Sundry Assets A/c |
Dr. |
9,80,000 |
|
|
|
To Sundry Liabilities A/c |
|
|
40,000 |
|
|
To HDR Ltd. |
|
|
9,00,000 |
|
|
To Capital Reserve A/c |
|
|
40,000 |
|
|
(Being the purchase of business of HDR Ltd.) |
|
|
|
|
|
|
|
|
||
|
HDR Ltd. A/c |
Dr. |
9,00,000 |
|
|
|
To 9% Debentures A/c (7,500 × 100) |
|
|
7,50,000 |
|
|
To Securities Premium Reserve A/c (7,500 × 20) |
|
|
1,50,000 |
|
|
(Being 36,000, 10% debentures issued as purchase consideration) |
|
|
Working Notes:
Number of Debentures issued = (9,00,000/120) = 7,500 debentures
Page No 9.54:
Question 26:
Grown Ltd. issued 500, 10% Debentures of ₹ 1,000 each credited as fully paid-up to the promoters for their services to incorporate the company. It also issued 100, 10% Debentures of ₹ 1,000 each credited as fully paid-up to the underwriters towards their commission. Pass the Journal entries.
Answer:
In the books of Grown Ltd. Journal |
|||||
Date |
Particulars |
|
L.F. |
Debit |
Credit |
|
Incorporation Expenses A/c |
Dr. |
5,00,000 |
|
|
|
To Promoters A/c |
|
|
5,00,000 |
|
|
(Being amount due to promoters for their services) |
|
|
|
|
|
|
|
|
||
|
Promoters A/c |
Dr. |
5,00,000 |
|
|
|
To 10% Debentures A/c (500 × 1,000) |
|
|
5,00,000 |
|
|
(Being 500, 10% debentures issued as purchase consideration) |
|
|
|
|
|
|
|
|
||
|
Underwriting Commission A/c |
Dr. |
1,00,000 |
|
|
|
To Underwriters A/c |
|
|
1,00,000 |
|
|
(Being amount due to underwriters for their services) |
|
|
|
|
|
|
|
|
||
|
Underwriters A/c |
Dr. |
1,00,000 |
|
|
|
To 10% Debentures A/c (100 × 1,000) |
|
|
1,00,000 |
|
|
(Being 100, 10% debentures issued as purchase consideration) |
|
|
|
|
|
|
|
|
||
|
Statement of Profit and Loss A/c |
Dr. |
6,00,000 |
|
|
|
To Incorporation Expenses A/c |
|
|
5,00,000 |
|
|
To Underwriting Commission A/c |
|
|
1,00,000 |
|
|
(Being expenses transferred to statement of profit and loss at the end of year) |
|
|
|
|
|
|
|
|
Page No 9.55:
Question 27:
'Sangam Woollens Ltd.', Ludhiana, are the manufacturers and exporters of woollen garments. The company decided to distribute free of cost woollen garments to 10 villages of Lahaul and Spiti District of Himachal Pradesh. The company also decided to employ 50 young persons from these villages in its newly established factory. The company issued 40,000 Equity Shares of ₹ 10 each and 1,000, 9% Debentures of ₹ 100 each to the vendor for the purchase of machinery of ₹ 5,00,000. Pass necessary Journal entries.
Answer:
In the books of Sangam Woollens Ltd. Journal |
|||||
Date |
Particulars |
|
L.F. |
Debit |
Credit |
|
Machinery A/c |
Dr. |
5,00,000 |
|
|
|
To Vendor A/c |
|
|
5,00,000 |
|
|
(Being machinery purchased from a Vendor) |
|
|
|
|
|
|
|
|
||
|
Vendor A/c |
Dr. |
5,00,000 |
|
|
|
To Equity Share Capital A/c (40,000×10) |
|
|
4,00,000 |
|
|
To 9% Debentures A/c (1,000×100) |
|
|
1,00,000 |
|
|
(Being equity shares and 9% Debentures issued as purchase consideration) |
|
|
|
|
|
|
|
|
Page No 9.55:
Question 28:
Best Barcode Ltd. took a loan of ₹ 5,00,000 from a bank giving ₹ 6,00,000; 9% Debentures as collateral security. Pass journal entries regarding issue of debentures , if any, and show this loan in the Balance Sheet of the company.
Answer:
Best Barcode Ltd. |
||
Balance Sheet |
||
Particulars |
Note No. |
Amount (Rs) |
I. Equity and Liabilities |
|
|
1. Shareholders’ Funds |
|
|
2. Non-Current Liabilities |
|
|
a. Long-Term Borrowings |
1 |
5,00,000 |
3. Current Liabilities |
|
|
Total |
|
5,00,000 |
|
|
|
II. Assets |
|
|
1. Non-Current Assets |
|
|
2. Current Assets |
|
|
a. Cash and Cash Equivalents |
2 |
5,00,000 |
Total |
|
5,00,000 |
|
|
|
NOTES TO ACCOUNTS
Note No. |
Particulars |
Amount (Rs) |
|
|
|
1 |
Long-Term Borrowings |
|
|
Loan (Secured by issue of 9% Debentures of Rs 6,00,000 as Collateral Security) |
5,00,000 |
|
|
|
2 |
Cash and Cash Equivalents |
|
|
Cash at Bank |
5,00,000 |
|
|
|
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Bank A/c |
Dr. |
|
5,00,000 |
|
|
To Loan A/c |
|
|
5,00,000 |
|
|
(Loan taken against issuing 9% Debentures as collateral Security) |
|
|
|
|
|
|
|
|
|
Alternative Method:
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Bank A/c |
Dr. |
|
5,00,000 |
|
|
To Loan A/c |
|
|
5,00,000 |
|
|
(Loan taken against issuing 9% debentures as collateral Security) |
|
|
|
|
|
|
|
|
|
|
|
Debenture Suspense A/c |
Dr. |
|
6,00,000 |
|
|
To 9% Debentures A/c |
|
|
6,00,000 |
|
|
(Issued 9% Debentures of Rs 6,00,000 as collateral security) |
|
|
|
|
|
|
|
|
|
Posting in the Company's Balance Sheet
Best Barcode Ltd. |
||
Balance Sheet |
||
Particulars |
Note No. |
Amount (Rs) |
I. Equity and Liabilities |
|
|
1. Shareholders’ Funds |
|
|
2. Non-Current Liabilities |
|
|
a. Long-Term Borrowings |
1 |
5,00,000 |
3. Current Liabilities |
|
|
Total |
|
5,00,000 |
|
|
|
II. Assets |
|
|
1. Non-Current Assets |
|
|
2. Current Assets |
|
|
a. Cash and Cash Equivalents |
2 |
5,00,000 |
Total |
|
5,00,000 |
|
|
|
NOTES TO ACCOUNTS
Note No. |
Particulars |
Amount (Rs) |
|
|
|
|
|
1 |
Long-Term Borrowings |
|
|
|
Secured: |
|
|
|
Loan (Secured by issue of 9% Debentures of Rs 6,00,000 as Collateral Security) |
5,00,000 |
|
|
9% Debentures (Issued as Collateral Security to Bank against loan) |
6,00,000 |
|
|
Less: Debenture Suspense Account |
6,00,000 |
- |
|
|
5,00,000 |
|
|
|
|
|
2 |
Cash and Cash Equivalents |
|
|
|
Cash at Bank |
5,00,000 |
|
|
|
|
Page No 9.55:
Question 29:
A company took a loan of ₹ 4,00,000 from Bandhan Bank Ltd. and issued 8% Debentures of ₹ 4,00,000 as a collateral security.
Answer:
When Debentures Issued as Collateral Security are shown separately
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
|
Bank A/c |
Dr. |
|
4,00,000 |
|
|
To Loan from Bandhan Bank Ltd. |
|
|
4,00,000 |
|
|
(Loan taken against issuing 8% Debentures as collateral security) |
|
|
|
|
|
|
|
|
|
|
|
Debenture Suspense A/c |
Dr. |
|
4,00,000 |
|
|
To 8% Debenture A/c |
|
|
4,00,000 |
|
|
(Debentures issued as collateral security) |
|
|
|
|
|
|
|
|
|
Posting in the Company's Balance Sheet (When Debentures Issued as Collateral Security are shown separately)
Balance Sheet |
||
Particulars |
Note No. |
Amount (Rs) |
I Equity and Liabilities |
|
|
1.Shareholders’ Funds |
|
|
2.Non-Current Liabilities |
|
|
a. Long-Term Borrowings |
1 |
4,00,000 |
3.Current Liabilities |
|
|
Total |
|
4,00,000 |
|
|
|
II Assets |
|
|
1. Non-Current Assets |
|
|
2. Current Assets |