TS Grewal Vol ii 2018 Solutions for Class 12 Commerce Accountancy Chapter 18 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 TS Grewal Vol ii 2018 Book of class 12 Commerce Accountancy Chapter 18 are provided here for you for free. You will also love the ad-free experience on Meritnation’s TS Grewal Vol ii 2018 Solutions. All TS Grewal Vol ii 2018 Solutions for class 12 Commerce Accountancy are prepared by experts and are 100% accurate.

Page No 9.54:

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 9.54:

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 9.54:

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 9.54:

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 9.55:

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 9.55:

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 9.55:

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 (7,000×200)

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 (7,000×350)

Dr.

 

24,50,000

 

 

Loss on issue of Debentures A/c (7,000×50)

Dr.

 

3,50,000

 

 

  To 10% Debentures A/c (7,000×300)

 

 

 

21,00,000

 

  To Securities Premium Reserve A/c (7,000×50)

 

 

 

3,50,000

 

  To Premium on Redemption of Debentures A/c(7,000×50)

 

 

 

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 9.55:

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 9.55:

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 9.55:

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 9.55:

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 (5,000×500)

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 (5,000×400)

Dr.

 

20,00,000

 

  Discount on issue of Debentures A/c (5,000×100)     5,00,000  

 

Loss on issue of Debentures A/c (5,000×50)

Dr.

 

2,50,000

 

 

  To 10% Debentures A/c (5,000×500)

 

 

 

25,00,000

 

  To Premium on Redemption of Debentures A/c (5,000×50)

 

 

 

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 9.55:

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 9.55:

Question 13:

A limited 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:

Journal

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

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 9.55:

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 9.56:

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 9.56:

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 9.56:

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 9.56:

Question 18:

X Ltd . took over the assets of ₹ 6,00,000 and liabilities of ₹ 80,000 of Y 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 X 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:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

Assets A/c

Dr.

 

6,60,000

 

 

Goodwill A/c(Balancing Figure)

Dr.

 

20,000

 

 

     To Liabilities A/c

 

 

 

80,000

 

     To Y Ltd.

 

 

 

6,00,000

 

(Purchase of business of Y Ltd.)

 

 

 

 

 

 

 

 

60,000

 

 

Y Ltd.

Dr.

 

 

60,000

 

  To Cash A/c

 

 

 

 

 

(Payment made in cash)

 

 

 

 

 

 

 

 

 

 

(a)

Y Ltd.

Dr.

 

5,40,000

 

 

  To 12% Debentures A/c 

 

 

 

5,40,000

 

( Purchase consideration discharged by issue of 12% Debentures)

 

 

 

 

 

 

 

 

 

 

(b)

Y 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)

Y 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:

1) Number of Debentures to issued=5,40,000120=4,500 Debentures
2) Number of Debentures to issued=5,40,00090=6,000 Debentures

Page No 9.56:

Question 19:

X Ltd. took over the assets of ₹ 6,60,000 and liabilities of ₹ 80,000 of Y Ltd . for ₹ 6,00,000. Give necessary journal entries in the books of X 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

(Rs)

Credit

Amount

(Rs)

 

Assets A/c

Dr.

 

6,60,000

 

 

Goodwill A/c (Balancing Figure)

Dr.

 

20,000

 

 

     To Liabilities A/c

 

 

 

80,000

 

     To Y Ltd.

 

 

 

6,00,000

 

(Purchase of business took over)

 

 

 

 

 

 

 

 

 

 

a.

Y Ltd.

Dr.

 

6,00,000

 

 

  To Cash A/c

 

 

 

60,000

 

  To 12% Debentures A/c 

 

 

 

5,40,000

 

(Purchase consideration discharged)

 

 

 

 

 

 

 

 

 

 

b.

Y 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 9.56:

Question 20:

Perfect Barcode Ltd. purchased computers from M/s. Computer Mart and paid the consideration as follows:
(a)  1,000 , 10% Debentures of ₹ 100 each at a discount of 10% ; and
(b) Issued a cheque for ₹ 80,000 for the balance amount.
Pass the journal entry in the books of Perfect Barcode Ltd.

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

Computers A/c

Dr.

 

1,70,000

 

 

Discount on issue of Debentures A/c (1,000×10)

Dr.

 

10,000

 

 

     To 10% Debentures A/c (1,000×100)

 

 

 

1,00,000

 

     To Bank A/c

 

 

 

80,000

 

( Purchase consideration discharged)

 

 

 

 

 

 

 

 

 

 

Page No 9.56:

Question 21:

Lotus Ltd. took over assets of ₹ 2,50,000 and liabilities of ₹ 30,000 of Goneby Company for the purchase consideration of ₹ 3,30,000. Lotus Ltd. paid the purchase consideration by issuing debentures of ₹ 100 each at 10% premium.
Give journal entries in the books of Lotus Ltd.

Answer:

Books of Lotus Ltd.

Journal

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

 

Assets A/c

Dr.

 

2,50,000

 

 

Goodwill A/c (balancing figure)

Dr.

 

1,10,000

 

 

To Sundry Liabilities A/c

 

 

30,000

 

To Goneby Company A/c

 

 

3,30,000

 

(Business purchased of Goneby Company)

 

 

 

 

 

 

 

 

 

Goneby Company  A/c

Dr.

 

3,30,000

 

 

To Debenture A/c

 

 

3,00,000

 

To Securities Premium A/c

 

 

30,000

 

(Issued 3,000 debentures at 10% premium)

 

 

 

 

 

 

 

 

Working Note:



Page No 9.57:

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 9.57:

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 9.57:

Question 24:

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 9.57:

Question 25:

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 9.57:

Question 26:

X Ltd. issued 10% Debentures of nominal value of  ₹ 10,00,000 as follows:
(i)  To sundry persons for cash at par  ₹ 5,00,000 nominal.
(ii) To a vendor for  ₹ 5,50,000 for purchase of fixed assets  ₹ 5,00,000 nominal.
Pass journal entries in the books of X Ltd.
 

Answer:

Journal

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

 

Bank A/c

Dr.

 

5,00,000

 

 

Fixed Assets A/c

Dr.

 

5,50,000

 

 

    To 10% Debentures A/c

 

 

 

10,00,000

 

    To Security Premium Reserve A/c

 

 

 

50,000

 

( Purchase consideration discharged by issue of 10% Debentures)

 

 

 

 

 

 

 

 

 

 

Page No 9.57:

Question 27:

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 9.57:

Question 28:

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

 

 

a. Cash and Cash Equivalents

2

4,00,000

Total

 

4,00,000

 

 

 

NOTES TO ACCOUNTS

Note No.

Particulars

Amount

(Rs)

 

 

 

1

Long-Term Borrowings

 

 

Secured:

 

 

Loan from Bandhan Bank (Secured by issue of  Debentures of Rs 4,00,000)

4,00,000

 

8% Debentures (Issued as Collateral Security to Bank against Loan)

 

4,00,000

 

 

 

Less: Debenture Suspense Account

4,00,000

-

 

 

4,00,000

 

 

 

2

Cash and Cash Equivalents

 

 

Cash at Bank

4,00,000

 

 

 

Alternative Method: When debentures Issued as Collateral Security are not 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 from Bandhan Bank secured by issuing Debentures as collateral security)

 

 

 

 

 

 

 

 

(When Debentures Issued as Collateral Security are not shown separately)

Balance Sheet

Particulars

Note No.

Amount 

(Rs)

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

2. Non-Current Liabilities