Questions · Q7
Q.Pass journal entries for the issue of 5,000, 9% Debentures of ₹100 each by A Ltd., assuming
(a) they are issued at par,
(b) they are issued at a premium of 5%, and
(c) they are issued at a discount of 10%. (Assume application and allotment money is received together, in full, on application.)
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Start your 14-day free trial to unlock the full solution →Face value of the debentures = 5,000 × 100 = ₹5,00,000 in every case; only the issue price and the resulting cash received change.
(a) Issued at par (issue price = ₹100):
Cash received = 5,000 × 100 = ₹5,00,000.
| Particulars | Dr. (₹) | Cr. (₹) |
|---|---|---|
| Bank A/c Dr. | 5,00,000 | |
| To Debenture Application and Allotment A/c | 5,00,000 | |
| Debenture Application and Allotment A/c Dr. | 5,00,000 | |
| To 9% Debentures A/c | 5,00,000 |
(b) Issued at a premium of 5% (issue price = 100 + 5 = ₹105):
Cash received = 5,000 × 105 = ₹5,25,000. Premium = 5,000 × 5 = ₹25,000.
| Particulars | Dr. (₹) | Cr. (₹) |
|---|---|---|
| Bank A/c Dr. | 5,25,000 | |
| To Debenture Application and Allotment A/c | 5,25,000 | |
| Debenture Application and Allotment A/c Dr. | 5,25,000 | |
| To 9% Debentures A/c | 5,00,000 | |
| To Securities Premium A/c | 25,000 |
(c) Issued at a discount of 10% (issue price = 100 − 10 = ₹90):
Cash received = 5,000 × 90 = ₹4,50,000. Discount = 5,000 × 10 = ₹50,000.
| Particulars | Dr. (₹) | Cr. (₹) |
|---|---|---|
| Bank A/c Dr. | 4,50,000 | |
| To Debenture Application and Allotment A/c | 4,50,000 | |
| Debenture Application and Allotment A/c Dr. | 4,50,000 | |
| Discount on Issue of Debentures A/c Dr. | 50,000 |
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