X.Ltd. Issued 15,000, 10% Debentures of Rs 100 Each. Give Journal Entries and the Balance Sheet in Each Of the Following Cases-Accountancy

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X.Ltd. issued 15,000, 10% debentures of Rs 100 each. Give journal entries and the Balance Sheet in each of the following cases:

(i) The debentures are issued at a premium of 10%;

(ii) The debentures are issued at a discount of 5%;

(iii) The debentures are issued as a collateral security to bank against a loan of Rs 12,00,000; and

(iv) The debentures are issued to a supplier of machinery costing Rs 13,50,000.




(i)

Books of X. Ltd.

Journal

DateParticularsL.F.Amount 
(Rs.)		Amount (Rs.)
 Bank A/cDr. 16,50,000
  To 10% Debentures A/c  15,00,000
  To Securities Premium A/c  1,50,000
(Being Issued 15,000, 10% debentures of Rs 100 each at 10% premium)

X Ltd.

Balance Sheet

ParticularsNote No.Amount  (Rs)
I. Equity and Liabilities  
1. Shareholders’ Funds  
 a. Reserves and Surplus11,50,000
2. Non-Current Liabilities  
a. Long-Term Borrowings215,00,000
3. Current Liabilities  
Total 16,50,000
II. Assets  
1. Non-Current Assets  
2. Current Assets  
a. Cash and Cash Equivalents316,50,000
Total 16,50,000

NOTES TO ACCOUNTS

Note No.ParticularsAmount (Rs)
1Reserves and Surplus 
 Securities Premium1,50,000
2Long-Term Borrowings 
 10% Debentures (Secured)15,00,000
3Cash and Cash Equivalents 
 Cash at Bank16,50,0

(ii)

DateParticularsL.F.Amount (Rs.)Amount (Rs.)
Bank A/cDr.14,25,000 
Discount on Issue of Debentures A/cDr.75,000 
 To 10% Debentures 15,00,000
(Being Issued 15,000 10% Debenture of Rs 100 each at 5% discount)

X Ltd.

Balance Sheet

ParticularsNote No.Amount  (Rs)
I. Equity and Liabilities  
1. Shareholder’s Funds  
2. Non-Current Liabilities  
a. Long-Term Borrowings115,00,000
3. Current Liabilities  
Total 15,00,000
II. Assets  
1. Non-Current Assets  
a. Other Non-Current Assets275,000
2. Current Assets  
a. Cash and Cash Equivalents314,25,000
Total 15,00,000

NOTES TO ACCOUNTS

Note No.ParticularsAmount (Rs)
1Long-Term Borrowings 
 10% Debentures (Secured)15,00,000
2Other Non-Current Assets 
 Discount on Issue of Debentures75,000
3Cash and Cash Equivalents 
 Cash at Bank14,25,000

(iii) No entry will be passed for issuing debentures as a collateral security 

X Ltd.

Balance Sheet

ParticularsNote No.Amount (Rs)
I. Equity and Liabilities  
1. Shareholders’ Funds  
2. Non-Current Liabilities  
a. Long-Term Borrowings112,00,000
3. Current Liabilities  
Total 12,00,000
II. Assets  
1. Non-Current Assets  
2. Current Assets  
a. Cash and Cash Equivalents212,00,000
Total 12,00,000

NOTES TO ACCOUNTS

Note No.ParticularsAmount (Rs)
1Long-Term Borrowings 
 Bank Loan (Secured against issue Debentures of Rs 12,00,000)  12,00,000
2Cash and Cash Equivalents 
 Cash at Bank12,00,000

Alternative Method

DateParticularsL.F.
Amount
(Rs.)
Amount
(Rs.)
 Debenture Suspense A/cDr. 15,00,000 
  To 10% Debentures A/c  15,00,000
(Being Issued 15,000 10% Debentures of Rs 100 each )

X Ltd.

Balance Sheet

ParticularsNote No.Amount  (Rs)
I. Equity and Liabilities  
1. Shareholders’ Fund  
2. Non-Current Liabilities  
a. Long-Term Borrowings112,00,000
3. Current Liabilities  
Total 12,00,000
II. Assets  
1. Non-Current Assets  
2. Current Assets  
a. Cash and Cash Equivalents212,00,000
Total 12,00,000

NOTES TO ACCOUNTS

Note No.ParticularsAmount (Rs)
1Long Term Borrowings 
 Secured: 
 Bank Loan12,00,000
 10 % Debentures (Secured against issue of Debentures of Rs 12,00,000)15,00,000
 Less: Debenture Suspense Account15,00,000
  12,00,000
2Cash and Cash Equivalents 
 Cash at Bank12,00,000

(iv)

DateParticularsL.F.
Amount
(Rs.)
Amount
(Rs.)
Machinery A/cDr. 13,50,000 
    To Vendor A/c   13,50,000
 (Being Machinery purchased from vendor)   
 Vendor A/cDr. 13,50,000
 Discount on Issue of Debentures A/cDr. 1,50,000
     To 10% Debenture A/c   15,00,000
 (15,000 10% Debentures @ Rs 100 each issued at 10% discount to the vendor in consideration of Machinery of Rs 13,50,000)   

X Ltd.

Balance Sheet

ParticularsNote No.Amount  (Rs)
I. Equity and Liabilities  
1. Shareholders’ Funds  
2. Non-Current Liabilities  
a. Long Term Borrowings115,00,000
3. Current Liabilities  
Total 15,00,000
II. Assets  
1. Non-Current Assets  
a. Fixed Assets  
i. Tangible Assets213,50,000
b. Other Non-Current Assets31,50,000
2. Current Assets  
Total 15,00,000

NOTES TO ACCOUNTS

Note No.ParticularsAmount (Rs)
1Long Term Borrowings 
 10% Debentures (Secured)15,00,000
2Tangible Assets 
 Plant and Machinery13,50,000
3Other Non-Current Assets 
 Discount on Issue of Debentures1,50,000

Chapter-2 Issue and Redemption of Debentures-II



Location: India

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