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Published on: 03/10/2019
Accounting for Debentures
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
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1.
Animesh Ltd issued 1,000, 12 % Debenture of 100 each in the following manner:
i) For cash at par Rs. 50,000 nominal
ii) For creditors of Rs. 45,000 against purchase of machinery Rs. 35,000 nominal
iii) To SBI bank against a loan of Rs. 10,000 as collateral security Rs. 15,000 nominal
2.
XYZ Ltd issued 3,60,000, 71/2% debentures of Rs 500 each. The company purchased 1,60,000 debentures at a price of Rs 485 each for investment purpose. After few months, they sold these debentures @ Rs 510 each in the market.
Pass journal entries to show the above transactions assuming sufficient balance in debenture redemption reserve as per legal requirements.
3.
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.
4.
RST Ltd had 6,000, 10% debentures of Rs 100 each due for redemption on 31st March, 2015. Assuming that the debentures were redeemed out of profits, pass necessary journal entries for the redemption of debentures. There was a credit balance of Rs 6,00,000 in surplus, i.e. balance in statement of profit and loss.
5.
On 1st January, 2015, ABC Ltd issued 10,000, 10% debentures of Rs 100 each at par. These debentures were redeemed at 5% premium at the end of fifth year out of profit. Give necessary journal entries for recording the above transactions.
6.
XYZ 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. The Board of Directors decided to transfer the minimum required amount to debenture redemption reserve account at the time of redemption. Pass journal entries at the time of redemption of debentures.
7.
DLF Ltd acquired assets of Rs.50,00,000 and took over creditors of Rs.5,00,000 from Vishal Enterprises. DLF Ltd issued 8% debentures of Rs.100 each at a premium of 25% as purchase consideration. Record necessary journal entries in the books of DLF Ltd.
8.
POR Ltd purchased furniture of Rs.80,000 from M/s Companion Ltd 50%· of the amount was I paid to M/S Companion Ltd by accepting a bill of exchange and for the balance, the company issued 9% debentures of Rs.100 each at a premium of 10%in favour of Mis Companion Ltd. Pass journal entries in the books of POR Ltd.
1.
Pass Journal entries
| Date | Particulars | L.F | Dr.(Rs.) | Cr.(Rs.) | |
|---|---|---|---|---|---|
| Debenture Application a/c | Dr. | 50,000 | |||
|
To 12% Debentures a/c |
50,000 | ||||
| (Being Application money received on 500 debentures @ Rs. 100 ) | |||||
| Machinery a/c | Dr. | 45,000 | |||
| To Vendor a/c | 45,000 | ||||
| ( Being Machinery purchased ) | |||||
| Vendor a/c | Dr. | 45,000 | |||
| To 12% Debentures a/c | 35,000 | ||||
| To Securities Premium a/c | 10,000 | ||||
| (Being Debentured issued to vendor at premium.) | |||||
| Bank a/c | Dr. | 10,000 | |||
| To Bank Loan a/c | 10,000 | ||||
| ( Being Loan borrowed ) | |||||
| Debenture Suspense a/c | Dr. | 15,000 | |||
| To 12% Debentures a/c | 15,000 | ||||
| ( Being Debentures issued as collateral security) | |||||
2.
Gain on sale of own debentures = Rs 40,00,000 Hint The company will not have to transfer amount to DRR and also invest in specified securities as required by the Companies Act, 2013. It is so because the debentures are purchased for investment and not for cancellation.
3.
Gain on cancellation of debentures = Rs 16,000
4.
Amount transferred to DRR = Rs 6,00,000;
Investment in specified securities to be made = Rs 90,000.
5.
Amount transferred to DRR = Rs 2,50,000
6.
Amount transferred to debenture redemption reserve = Rs 25,000
7.
Number of debentures issued = 36,000
8.
Number of debentures issued = 4,000
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