a. X Limited issued 2,000 shares, 15% debentures of ₹100 each at par, payable as follows: ₹25 on application; ₹25 on allotment and ₹50 on 1st call and final call. Applications were received for 3,000 debentures. Applications for 1,600 debentures were accepted in full. Application

Question

a. X Limited issued 2,000 shares, 15% debentures of ₹100 each at par, payable as follows: ₹25 on application; ₹25 on allotment and ₹50 on 1st call and final call. Applications were received for 3,000 debentures. Applications for 1,600 debentures were accepted in full. Applications for 600 debentures were alloted 400 debentures and the rest were rejected. All moneys due were received except final call on 100 debentures. Pass necessary journal entries.
Or
b. Z Limited purchased machinery from K Limited and paid K Limited as follows:
i) By issuing 5,000 equity shares of ₹10 each at a premium of 30%.
ii) By issuing 1000, 8% debentures of ₹100 each at a discount of 10%.
iii) Balance by giving a promissory note of ₹48,000 payable after two months.
Pass necessary journal entries for the purchase of Machinery and payment to K Limited in the books of Z Limited.

Accepted Answer

>

> [!TLDR]
> (a) X Limited's 2,000, 15% debentures are allotted (1,600 in full + 400 pro-rata out of 600 applied; 800 rejected), with ₹5,000 calls-in-arrears on 100 debentures. (b) Z Limited's machinery purchase of ₹2,03,000 from K Limited is settled by equity shares at a premium, debentures at a discount, and a promissory note.
>
> **(a) X Limited — 2,000, 15% Debentures of ₹100, Application ₹25, Allotment ₹25, Call ₹50**
> Applications received = 3,000 debentures. Allotted: 1,600 in full + 400 (out of 600 applied, pro-rata) = 2,000. Rejected: 3,000 − 1,600 − 600 = 800 (fully refunded).
>
> Excess application money on the pro-rata 600→400 category = (600−400) × ₹25 = ₹5,000, adjusted towards allotment.
>
> 1. Bank A/c Dr. 75,000
>     To Debenture Application A/c 75,000
> (Application money received on 3,000 debentures @ ₹25)
>
> 2. Debenture Application A/c Dr. 75,000
>     To 15% Debentures A/c 50,000
>     To Debentures Allotment A/c 5,000
>     To Bank A/c 20,000
> (Application money on allotted debentures transferred; excess on pro-rata applications adjusted to allotment; money on rejected applications refunded)
>
> 3. Debentures Allotment A/c Dr. 50,000
>     To 15% Debentures A/c 50,000
> (Allotment due on 2,000 debentures @ ₹25)
>
> 4. Bank A/c Dr. 45,000
>     To Debentures Allotment A/c 45,000
> (Allotment money received, after adjusting ₹5,000 excess application money)
>
> 5. Debentures First and Final Call A/c Dr. 1,00,000
>     To 15% Debentures A/c 1,00,000
> (Call due on 2,000 debentures @ ₹50)
>
> 6. Bank A/c Dr. 95,000
>     Calls in Arrears A/c Dr. 5,000
>     To Debentures First and Final Call A/c 1,00,000
> (Call money received except on 100 debentures)
>
> 15% Debentures A/c total credited = 50,000+50,000+1,00,000 = ₹2,00,000 (= 2,000 × ₹100), with ₹5,000 outstanding as Calls-in-Arrears.
>
> **(b) Z Limited purchases machinery from K Limited**
> i) 5,000 equity shares of ₹10 at 30% premium (₹13 issue price) = ₹65,000
> ii) 1,000, 8% debentur

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