What is meant by 'Debenture'? 

What is meant by convertible debentures? 

Why would an investor prefer to invest in debentures of a company rather than in its shares? 

Give the meaning of issue of debentures as a collateral security.

What is meant by irredeemable debentures? 

Pass necessary journal entries for the issue of debentures in the following cases:

   (i) Rs.50,000, 8% debentures of Rs.100 each issued at par redeemable at 10% Premium.

    (ii) Rs.60,000, 8% debentures of Rs.100 each issued at a Premium of 10%, redeemable at par.

X Ltd. purchased machinery for Rs.5,50,000 from Y Ltd. Rs.55,000 were paid by X Ltd. in cash and the balance was paid by issue of 9% depentures of Rs.1,000 each at 10 % premium redeemable after three years. Pass necessary journal entries in the books of the company.

Bright Ltd. issued 2,00,000, 9% debentures of Rs.100 payable as follows:

          On Application         Rs 30

          On Allotment           Rs 70

The debentures were fully subscribed and all the money was duly received. As per terms of the prospectus, the debentures are redeemable at Rs.110 per debenture. Give necessary entries regarding regarding issue of debentures in the books of company.

F Ltd. issued Rs.1,00,000, 15% debentures of Rs.100 each at a premium of 5% redeemable at a premium of 10% at the end of 4 years. Assuming the company has the required balance in Debenture Redemption Investment Account. Pass the journal entries at the time of redemption of debentures.

Why is premium on the issue of debentures considered as a capital profit?

ABC Ltd issued Rs 1,00,000, 6%debentures of ~ 10 each at a premium of Rs 2 per debenture on 1st April, 2014. The issue was fully subscribed and interest will be paid at the end of each financial year. Pass necessary journal entries for the year 2014-15.

PQR Ltd purchased for cancellation Rs 50,000 of its 15% debentures at Rs 98. The expenses of purchase amounted to Rs 50. Journalise.

On January 1st, 2006 S ltd issued 1,000 10% debentures of Rs.500 each at par redeemable after 7 years. However the company gave an option to debenture holder to get debentures However the company gave an option to debenture holder to get debentures converted into equity shares of Rs. 100 each at a premium of Rs. 25 per share any time after the expiry of one 
Arvind the holder of 200 debentures informed on Jan, 2006 that he wanted to excise the option of conversion of debentures into equity shares.
Pass necessary Journal entries to record the issue of debentures on Jan, 2004 and conversion of debentures on Jan, 2006.

Nav Lakshmi Ltd invited applications for issuing 3,000, 12% debentures of Rs 100 each at a premium of Rs 50 per debenture. The full amount was payable on application. Applications were received for 4,000 debentures. Applications for 1,000 debentures were rejected and application money was refunded. Debentures were allotted to the remaining applicants. Pass necessary journal entries for the above transactions in the books of Nav Lakshmi Ltd. 

Journalise the following transactions: 
(a) 10 debentures issued at Rs.100 repayable at rs. 100.
(b) 10 debentures issued at Rs.95, repayable at rs. 100.
(c) 10 debentures issued at Rs.105, repayable at rs. 100.
(d) 10 debentures issued at Rs.100, repayable at rs. 105.
(e) 10 debentures issued at Rs.95, repayable at rs. 105.