A Company Issues the Following Debentures: (i) 10,000, 12% Debentures of Rs 100 Each at Par But Redeemable At Premium Of 5% After 5 Years-Bzzii

A company issues the following debentures:

(i) 10,000, 12% debentures of Rs 100 each at par but redeemable at premium of 5% after 5 years;

(ii) 10,000, 12% debentures of Rs 100 each at a discount of 10% but redeemable at par after 5 years;

(iii) 5,000, 12% debentures of Rs 1,000 each at a premium of 5% but redeemable at par after 5 years;

(iv) 1,000, 12% debentures of Rs 100 each issued to a supplier of machinery costing Rs 95,000. The debentures are repayable after 5 years; and

(v) 300, 12% debentures of Rs 100 each as a collateral security to a bank which has advanced a loan of Rs 25,000 to the company for a period of 5 years.

Pass the journal entries to record the: (a) issue of debentures; and (b) repayment of debentures after the given period. 

(a) Issue 

Date	Particulars		L.F.	Amount (Dr.)	Amount (Cr.)
(i)	Bank A/c	Dr.		10,00,000
	To 12% Debenture Application A/c				10,00,000
	(Debenture Application money received on 10,000 12% Debenture)
	12% Debenture Application A/c	Dr.		10,00,000
	Loss on Issue of Debenture A/c	Dr.		50,000
	12% Debenture A/c				10,00,000
	To Premium on Debenture A/c				50,000
	(Debenture Application money transferred t0 12% debenture A/c and the debenture are Issued with term of repayable at 5% premium)
(ii)	Bank A/c	Dr.		9,00,000
	To 12% Debenture Application and allotment A/c				9,00,000
	(Debenture Application and allotment money received)
	12% Debenture Application and allotment A/c	Dr.		9,00,000
	Loss on Issue of Debenture	Dr.		1,00,000
	To Debenture A/c				10,00,000
	(Money due on Debenture)
(iii)	Bank A/c	Dr.		52,50,000
	To 12% Debenture Application and allotment A/c				52,50,000
	(Debenture Application and allotment money received)
	Debenture Application and allotment A/c	Dr.		52,50,000
	To Debenture A/c				50,00,000
	To Securities Premium A/c				2,50,000
	(Allotment of Debenture at Premium)
(iv)	Machinery A/c	Dr.		95,000
	To Vendor A/c				95,000
	(Purchase machinery from vendor)
	Vendor A/c	Dr.		95,000
	Discount of Issue of Debenture	Dr.		5,000
	To 12% Debenture A/c				1,00,000
	(Debenture Issued at discount to vendor of machinery)
(v)	12% Debenture Suspense A/c	Dr.		30,000
	To 12% Debenture A/c				30,000
	(300, 12% Debentures of Rs 100 each Issued as Collateral)

(b) Redemption

Date	Particulars		L.F.	Amount (Rs.)	Amount (Rs.)
(i)	12% Debenture A/c			10,00,000
	Premium on Redemption of Debenture A/c			50,000
	To Debenture A/c				10,50,000
	(Being amount Due on Redemption)
	Debenture holders A/c			10,50,000
	To Bank A/c				10,50,000
	(Being Payment made to Debenture holders)
(ii)	12% Debenture A/c			10,00,000
	To Debenture holders A/c				10,00,000
	(amount Due on Redemption of debenture)
	Debenture holders A/c			10,00,000
	To Bank A/c				10,00,000
	(Being Payment made to Debenture holders A/c)
(iii)	12% Debenture A/c			50,00,000
	To Debenture holders A/c				50,00,000
	(Being amount Due on Redemption)
	Debenture holders A/c			50,00,000
	To Bank A/c				50,00,000
	(Being Payment made to Debenture holders A/c)
(iv)	12% Debenture A/c			1,00,000
	To Vendor A/c				1,00,000
	(Being amount Due on Vendor)
(v)	12% Debenture A/c			30,000
	To Debenture Suspense A/c				30,000
	(Being Debenture and Debenture Suspense Account Closed)

Chapter-2 Issue and Redemption of Debentures-II

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