12th CBSE Accountancy Accounting for Debentures Important Questions | QB365

12th Standard CBSE Syllabus & Materials

12th Standard CBSE

CBSE 12th Economics Government Budget and the Economy Previous year Question Papers Study Material - QB365 Set A

NEW

12th Standard CBSE

CBSE 12th Computer Science Interface Python with MySQL - New Previous year Question Papers Study Material - QB365 Set A

NEW

12th Standard CBSE

CBSE 12th Computer Science Database Concept - New Previous year Question Papers Study Material - QB365 Set A

NEW

12th Standard CBSE

CBSE 12th Computer Science Data Communication - New Previous year Question Papers Study Material - QB365 Set A

NEW

12th Standard CBSE

CBSE 12th Computer Science Data Structures - New Previous year Question Papers Study Material - QB365 Set A

NEW

12th Standard CBSE

CBSE 12th Computer Science Functions - New Previous year Question Papers Study Material - QB365 Set A

12th CBSE Accountancy Accounting for Debentures Important Questions

Published on: 14/12/2018

Accounting or accounts is the measurement, processing, and communication of financial information about economic entities such as businesses and corporations. Practicing last year papers is the best way for preparing for exams. They can help you to increase your speed and confidence in the exam. This helps students find to answer the most frequently asked question, How to prepare for CBSE board exams.

These papers have been created with the sole purpose of helping the students with their preparations. We hope that these sample papers will help you prepare better for your exams and help you fine-tune your strategies for the board exams.

In this question paper, questions are covered from the chapter Accounting for Debentures and questions are prepared as per NCERT guidelines. Questions are covered from NCERT solutions and NCERT Exemplar.

The latest sample papers have been designed as per the latest blueprints, syllabus and examination trends. Sample papers should be practiced in examination condition at home or school and also show it to your teachers for checking or compare with the answers provided.

Download CBSE Class 12th Standard CBSE Accountancy question papers, sample papers, important questions, and previous year solved papers in PDF format. Get free study materials, NCERT solutions, and exam preparation resources for Class 12th Standard CBSE Accountancy

Questions + Answers key

Take MCQ Accountancy Test

QB365 Student Learing Managemnet System

Std: 12th Standard CBSE - Accountancy

chapter: - Model Question paper

Visit QB365-SLMS - https://www.qb365.in/slms/ Complete Questions and Answers

Questions:

Generic 3

6 x 3 = 18

State the minimum amount of profit required to be transferred to debenture redemption reserve.

Why would an investor prefer to invest partly in shares and partly in the debentures of a company?

Pass necessary journal entries for the following transactions :
(i) The company had a balance of Rs. 6,00,000, 8% Debentures. Out of these, 25% debentures were redeemed by draw of lots at a premium of 25%.
(ii) Paid half yearly interest on Rs. 1,80,000, 12% Debentures.

What is meant by irredeemable debentures?

Vijay Laxmi Ltd. invited applications for issuing 10,000, 12% Debentures of Rs.100 each at a premium of Rs 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.
Pass necessary Journal Entries in the books of Vijay Laxmi Ltd. for the above transactions.

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.

Generic 8

4 x 8 = 32

Nand Ram Ltd issued 1,00,000, 8% debentures of Rs.10 each at Rs.12 on 1st April, 2014. The issue was fully subscribed. In terms of the issue of debentures, interest was payable at the end of the financial year. Pass the journal entries for the above transactions.

ABC Ltd issued 1,00,000, 9% debentures of Rs 50 each at a premium of 10% on 30th June, 2013 redeemable on 31st March, 2015. The issue was fully subscribed. The company decided to create DRR on 31st March, 2014 and also decided to invest in 10% government securities to meet the legal requirement.
Pass journal entries for issue and redemption of debentures.

ABC Ltd invited applications for 8,000 debentures of Rs 100 each issued at a premium of 20%. Applications were received for 12,000 debentures and it was decided to deal with the same as follows
(i) To refuse allotment to applicants for 2,400 debentures.
(ii) To give full allotment to applicants for 800 debentures.
(iii) To allot the remaining debentures on pro-rata basis among other applicants.
(iv) To utilise excess application money in part payment of allotment money.

10.

Arihant Ltd has 20,000, 9% debentures of Rs 100 each outstanding in the books of accounts as on 31st March, 2015, to be redeemed on 31st March, 2020. Show how will you disclose debentures in the balance sheet.

Generic 6

2 x 6 = 12

11.

LMN Ltd purchased its own debentures of the face value of Rs 2,00,000 from the open market for immediate cancellation at Rs 92. Pass journal entries.

12.

On 31st March, 2015, DEF Ltd had Rs 8,00,000, 9% debentures due for redemption. The company had a balance of Rs 1,40,000 in its debenture redemption reserve. Pass necessary journal entries for redemption of debentures.

Visit QB365-SLMS - https://www.qb365.in/slms/

Answers Key:

Generic 3

6 x 3 = 18

An amount equals to 25%of the debentures issued must be transferred to debenture redemption reserve before the redemption begins.

An investor prefers to invest partly in shares and partly in the debentures of a company to earn steady income with higher return.

(i) Dr. 8% Debentures A/c Rs. 1,50,000 and Premium on Redemption of Debentures A/c Rs. 37,500, Cr. Debentureholders A/c Rs. 1,87,500; Dr. Debentureholders A/c, Cr. Bank A/c by Rs. 1,87,500
(ii) Dr. Interest on Debentures A/c; Cr. Debentureholders A/c by Rs. 10,800; Dr. Debentureholders A/c; Cr. Bank A/c by Rs. 10,800.
[Hint : Case (i) As debentures issued are not given in the question, it is assumed that DRR has already been created.]

(i) A share is a part of the capital of the company whereas a debentures is a part of loan of the company.
(ii) Shares cannot be converted into debentures whereas debentures can be converted into shares.

(a) Dr.Bank A/c, Cr. Debenture Application and Allotment A/c by Rs.22,95,000(i.e., 13,500(d) X Rs.170);
(b) Dr.Debenture Application and Allotment A/c Rs.22,95,000; Cr.12% Debentures A/c, Rs.10,00,000; Securities Premium Reserve A/c Rs.7,00,000 and Bank A/c Rs.5,95,000.

(i) (a) Dr.Bank A/c, Cr.Debenture Application and Allotment A/c by Rs.50,000
(b) Dr.Debenture Application and Allotment A/c Rs.50,000 and Loss on Issue of Debentures A/c Rs.5,000; Cr.8% Debentures A/c Rs.50,000 and Premium on Redemption of Debentures A/c Rs.5,000.
(ii) (a) Dr.Bank A/c, Cr.Debenture Application and Allotment A/c by Rs.66,000
(b) Dr.Debenture Application and Allotment A/c Rs.66,000, Cr.8% Debentures A/c Rs.60,000 and Securities premium Reserve, Rs.6,000.

Generic 8

4 x 8 = 32

Journal

Date	Particular		Amt(Dr)	Amt(Cr)
2014
Apr 1	Bank A/c(1,00,000X2)	Dr	12,00,000
	To Debenture Application and Allotment A/c			12,00,000
	(Being the application money received on 1,00,000,8% debentures@Rs.12)
	Debenture Application and Allotment A/c	Dr	12,00,000
	To 8% Debentures A/c(1,00,000X10)			10,00,000
	To Securities Premium Reserve A/c(1,00,000X2)			2,00,000
	(Being application money transferred to debentures account)
2015
Mar31	Debenture Interest Ale (10,00,000 x 8%)	Dr	80,000
	To Debentureholders' A/c			80,000
	(Being the interest payable on 8% debentures provided)
Mar 31	Debentureholders' A/c	Dr	80,000
	To Bank A/c			80,000
	(Being interest paid to debenture holders)
Mar 31	Statement of Profit and Loss	Dr	80,000
	To Debenture Interest A/c			80,000
	(Being the debenture interest transferred to statement of profit and loss)

Journal

Date	Particulars		Amt (Dr)	Amt (Cr)
2013 Jun30	Bank A/c (1.00,000 x 55) To Debenture Application and Allotment A/c (Being the application money received at a premium of 10%)	Dr	55,00,000	55,00,000
Jun30	Debenture Application and Allotment A/c To 9% Debentures A/c (l00,000 x 50) To Securities Premium Reserve Ale (1,00,000 x5) (Being the application money transferred to 9% debentures and securities premium reserve account)	Dr	55,00,000	50,00,000 5,00,000
2014 Mar31	Surplus, i.e. Balance in Statement of Profit and Loss To Debenture Redemption Reserve A/c (Being 25% of value of debentures transferred to DRR)	Dr	12,50,000	12,50,000
Apr30	Debenture Redemption Investment A/c To Bank A/c (Being 15% of the value of debentures invested in government securities)	Dr	7,50,000	7,50,000
2015 Mar31	Bank A/c To Debenture Redemption Investment A/c To Interest Earned A/c \(\left( 7,50,000\times \frac { 10 }{ 100 } \times \frac { 11 }{ 12 } \right) \) (Being the investments bearing 10% interest per annum encashed on redemption of debentures)	Dr	8,18,750	7,50,000 68,750
Mar31	9% Debentures A/c To Debentureholders' A/c (Being the amount due on redemption of debentures)	Dr	50,00,000	50,00,000
Mar31	Debentureholders' A/c To bank A/c (Being the payment made to redeem debentures)	Dr	50,00,000	50,00,000
Mar31	Debenture Redemption Reserve A/c To General Reserve A/c (Being the DRRtransferred to general reserve after redemption of debentures)	Dr	12,50,000	12,00,000

**Journal**
Particulars		Amt(Dr)	Amt(Cr)
Bank A/c (12,000 x 120)	Dr	14,40,000
To Debenture Application and Allotment A/c			14,40,000
(Being the application money received)
Debenture Application and Allotment A/c	Dr	14,40,000
To Debentures A/c (8,000 x 100)			8,00,000
To Securities Premium Reserve A/c (8,000 x 20)			1,60,000
To Bank A/c			4,80,000
(Being the application money adjusted and surplus refunded)

(b) If the Amount is Payable in Instalments

**Journal**
Particulars		Amt(Dr)	Amt(Cr)
Bank A/c (12,000 x 20)	Dr	2,40,000
To Debenture Application A/c			2,40,000
(Being the application money received)
Debenture Application A/c	Dr	2,40,000
To Debentures A/c (8,000 x 20)			1,60,000
To Debenture Allotment A/c			32,000
(Being the application money adjusted and surplus refunded)
Debenture Allotment A/c	Dr	4,00,000
To Debentures A/c (8,000 x 30)			2,40,000
To Securities Premium Reserve A/c (8,000 x 20)			1,60,000
(Being the allotment money due)
Bank A/c	Dr	3,66,000
To Debenture Allotment A/c			3,66,000
(Being the allotment money received)
Debenture First and Final Call A/c	Dr	4,00,000
To Debentures A/c (8,000 x 50)			4,00,000
(Being the call money due)
Bank A/c	Dr	4,00,000
To Debenture First and Final Call A/c			4,00,000
(Being the call money received)

10.

In the balance sheet, they are shown as follows:
Balance Sheet
as at 31st March, 2015 (Relevant part only)

Particulars	Note No.	Amt (Rs)
1. Equity And Liabilities
1. Non-current Liabilities
Long-term Borrowings	1	20,00,000
		20,00,000

Notes to Accounts

Particulars	Amt (Rs)
1. Long-term Borrowings
20,000, 9% Debentures of Rs 100 each	20,00,000

Suppose in the above illustration, a part of debentures i.e. 2,000 debentures of Rs 100 each are due for redemption on 31st January, 2016. The rest of the debentures will be redeemed in 2020. Show how will you disclose debentures in the balance sheet.
These debentures will be shown in the balance sheet as follows:
Balance Sheet
as at 31st March, 2015 (Relevant part only)

Particulars	Note No.	Amt (Rs)
1. Equity And Liabilities
1. Non-current Liabilities
Long-term Borrowings	1	18,00,000
2. Current Liabilities
Other Current Liabilities	2	20,00,000
		20,00,000

Notes to Accounts

Particulars	Amt (Rs)
1. Long-term Borrowings
18,000, 9% Debentures of Rs 100 each	18,00,000
2. Other Current Liabilities
Current Maturities of Long-term Debts
2,000, 9% Debentures of Rs 100 each	2,00,000
(Redeemable on 31st January, 2016)

Suppose in the above illustration 1, if debentures are issued on 1st February, 2015 and are redeemable on 31st January, 2016, then show how will you disclose debentures in the balance sheet.
It will be shown in the balance sheet as follows:
Balance Sheet
as at 31st March, 2015 (Relevant part only)