Solution

PRACTICE QUESTIONS- ISSUE OF DEBENTURES

Class 12 - Accountancy
1. Read the text carefully and answer the questions:
Naman Ltd. took over Assets of ₹ 6,00,000 and Liabilities of ₹ 40,000 of Pawan Ltd. at an agreed value of ₹ 6,30,000. Naman
Ltd. issued 10% Debentures of ₹ 100 each at a discount of 10% to Pawan Ltd. in full satisfaction of the price. Naman Ltd. writes
off any capital losses incurred during a year, at the end of that financial year.
(i) (a) Goodwill
Explanation:
Goodwill
(ii) (d) ₹ 70,000
Explanation:
₹ 7,00,000 - ₹ 6,30,000 = ₹ 70,000
(iii) (d) Statement of Profit and Loss
Explanation:
Statement of Profit and Loss
(iv) (d) ₹ 70,000
Explanation:
10 % of ₹ 7,00,000 = ₹ 70,000
(v) (d) issue of debentures in consideration other than cash
Explanation:
issue of debentures in consideration other than cash
2. a. JOURNAL
Date Particulars L.F. Dr. (₹) Cr. (₹)

2019
Bank A/c Dr. 95,000
Jan 1

To Debenture Application & Allotment A/c 95,000

(Debenture application money received)

Debenture Application & Allotment A/c Dr. 95,000

Discount on Issue of Debentures A/c Dr. 5,000

To 12% Debentures A/c 1,00,000

(Issue of 1,000, 12% debentures of ₹ 100 each at a discount of 5%)

Dec 31 Debenture Interest A/c Dr. 12,000

To Debentureholders A/c 12,000

(Interest due on debentures)

Debentureholders A/c Dr. 12,000

To Bank A/c 12,000

(Payment of interest)

Statement of Profit and Loss Dr. 17,000

To Debenture Interest A/c 12,000

To Discount on Issue of Debentures A/c 5,000

(Debentures interest transferred to Statement of Profit & Loss and Discount on issue of
debentures written off)

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 b. DISCOUNT ON ISSUE OF DEBENTURES ACCOUNT
Dr. Cr.

Date Particulars ₹ Date Particulars ₹

2019 Jan 1 To 12% Debentures A/c 5,000 2019 Dec 31 By Statement of Profit & Loss 5,000

5,000 5,000

3. JOURNAL OF KUMAR LTD.

Date Particulars L.F. Dr. (₹) Cr. (₹)

For Purchase of Assets:

Sundry Assets A/c Dr. 9,90,000

To Neeraj
9,90,000
(Sundry Assets purchased from Neeraj & Co. for ₹ 9,90,000)

(i) Issue of Debentures at Par:

Neeraj Dr. 9,90,000

To 11% Debentures A/c

9,90,000
(Allotment of 9,900; 11% Debentures of ₹ 100 each at par to Neeraj)

(ii) Issue of Debentures at Premium:

Neeraj Dr. 9,90,000

To 11% Debentures A/c 9,00,000

To securities Premium A/c

(9,000 (i.e., 9,90,000 ÷ ₹ 110); 11% Debentures of ₹ 100 each issued at a premium of 90,000
10% to Neeraj)

(iii) Issue of Debentures at Discount:

Neeraj Dr. 9,90,000

Discount on Issue of Debentures A/c Dr. 1,10,000

To 11% Debentures A/c

(11,000 (i.e., ₹ 9,90,000 ÷ ₹ 90); 11% Debentures of ₹ 100 each issued at a discount of 11,00,000
10% to Neeraj)

Statement of Profit & Loss (Finance Cost) Dr. 1,10,000

To Discount on Issue of Debentures A/c

1,10,000
(Discount on issue of Debentures written off)
4. Journal of Govind Ltd.
Date Particular L.F. Dr. (₹) Cr. (₹)

Bank A/c Dr. 5,00,000

To 11% Debentures Application A/c

5,00,000
(Application money received on 20,000 debentures @ ₹25 each)

11% Debentures Application A/c Dr. 5,00,000

To 11% Debentures A/c

5,00,000
(Application money transferred)

11% Debentures Allotment A/c Dr. 7,00,000

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 To 11% Debentures A/c 7,00,000
(Allotment due)

Bank A/c Dr. 7,16,500

To 11% Debenture Allotment A/c 6,96,500

To Calls in Advance A/c

(Allotment received on 19,900 debentures @ ₹ 35 per debenture; plus call received in 20,000
advance on 500 debenture @ ₹ 40 per debenture)

11% Debenture First & Final Call A/c Dr. 8,00,000

To 11% Debentures A/c

8,00,000
(First and final call due on 20,000 debentures @ ₹ 40 per debenture)

Bank A/c Dr. 7,76,000

Calls in Advance A/c Dr. 20,000

To 11% Debentures First & Final Call A/c

(First and final call money received on 19,900 debentures @ ₹ 40 per debenture; Calls in 7,96,000
advance on 500 debentures of A previously received now adjusted)
5. In the books of Johnson Ltd.
Loss on Issue of Debentures A/c
Dr. Cr.

Date Particulars Amount Date Particulars Amount

2020 April 01 To 9% Debentures A/c 1,00,000 2021 March 31 By Statement of Profit & Loss A/c 1,00,000

1,00,000 1,00,000
9% Debentures A/c
Dr. Cr.

Date Particulars Amount Date Particulars Amount

2021 March 31 To 9% Debentures A/c 2,00,000 2021 March 31 By Debenture Application & Allotment A/c 1,00,000

2021 March 31 To Balance c/d 8,00,000 By Loss on Issue of Debentures A/c 50,000

10,00,000 10,00,000

2022 March 31 To Debentureholders A/c 5,00,000 2021 April 01 By Balance b/d 8,00,000

2022 March 31 To Balance c/d 3,00,000

8,00,000 8,00,000

2023 March 31 To Debentureholders A/c 3,00,000 2022 April 01 By Balance b/d 3,00,000
Premium on Redemption of Debentures A/c
Dr. Cr.

Date Particulars Amount Date Particulars Amount

2021 March 31 To Debentureholders A/c 10,000 2020 April 01 By Loss on Issue of Debentures A/c 50,000

2021 March 31 To Balance c/d 40,000

50,000 50,000

2022 March 31 To Debentureholders A/c 25,000 2021 April 01 By Balance b/d 40,000

2022 March 31 To Balance c/d 15,000

40,000 40,000

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2022 March 31 To Debentureholders A/c 15,000 2022 April 01 By Balance b/d 15,000

15,000 15,000

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