Hridaan’s Edumax

S1 - 18, Gate 3, Dosti Shoppe

Imperia, Manpada Thane

Debentures
CLASS 12 - ACCOUNTANCY

Time Allowed : 1 mins Maximum Marks : 345

Section A

1 A Ltd. issued 5,000; 9% [3]

Debentures of₹ 100
each at par and also
raised a loan of ₹
80,000 from the bank,
collaterally secured by
₹ 1,00,000; 9%
Debentures. How will
be the Debentures
shown in the Balance
Sheet of the company
when the company has
passed Journal entry
for issue of Debentures
as collateral security in
the books?
2 On 1 st July 2018, Z Ltd. [3]
issued 40,000, 9%
Debentures of₹ 100
each at 4% discount
redeemable at 6%
premium after five
years. The debentures
were fully subscribed.
It has a balance of ₹
2,00,000 in Capital
Reserve and ₹
1,40,000 in Securities
Premium Reserve. It
decided to write off the
loss on issue of
debentures in the first
 year itself. Pass the
Journal entries for the
issue of debentures
and writing off loss on
issue of debentures.
3 Vijay Laxmi Ltd. invited [3]
applications for
10,000; 12%
Debentures of₹ 100
each at a premium of₹
70 per debenture. The
full amount was
payable on application.
Applications were
received for 13,500
debentures.
Applications for 3,500
debentures were
rejected and
application money was
refunded. Debentures
were allotted to the
remaining applications.
Pass necessary Journal
entries in the books of
Vijay Laxmi Ltd. for the
above transactions.
4 Disha Ltd. purchased [3]
machinery from Nisha
Ltd. and paid to Nisha
Ltd. as follows:

1. By issuing
10,000, equity
shares of₹ 10
each at a
premium of
10%.

2. By issuing 200,
9% debentures
of₹ 100 each at
a discount of
10%.

3. Balance by
 accepting a bill
of exchange of₹
50,000 payable
after one month.

Pass necessary journal

entries in the books of
Disha Ltd. for the
purchase of machinery
and making payment to
Nisha Ltd.

5 On 1 - 4 - 2018, Z Ltd. [3]

issued 5,00,000, 8%
Debentures of₹ 100
each at a discount of
6% redeemable at a
premium of 10% after
four years. The amount
was payable as follows:
On application ₹ 50
per Debenture. Balance
on allotment. Record
the necessary journal
entries for the issue of
debentures in the
books of the company.
6 Ashoka Ltd. purchased [3]
machinery costing₹
1,35,000. It was agreed
that the purchase
consideration be paid
by issuing 12%
debentures of ₹ 100
each. Assume
debentures have been
issued,

1. at par, and

2. ata discount of
10%.

Give necessary journal

entries.

7 Zee Ltd. issued 10,000, [3]

 10% Debentures of₹
100 each as collateral
security for a loan of ₹
8,00,000 from Dena
Bank. The company
was unable to repay
the loan on which
interest payable was ₹
2,00,00 as on 31st
March 2019. Dena
Bank, on 31st March
2019, exercised the
right vested in it by
way of debentures
being issued as
collateral Security. Pass
Journal entries in the
books of Zee Ltd. on
31st March 2019.
8 A Company purchased [3]
assets of the book
value of₹ 6,00,000 and
took over liabilities of
₹ 1,50,000 from
Golden Ltd. It was
agreed that the
purchase consideration
settled at ₹ 4,80,000 be
paid by issuing
debentures of ₹ 100
each at a premium of
10%. It was further
agreed that any
fraction of the
debenture be paid in
cash. Give journal
entries in the books of
the purchasing
company.
9 Z Ltd. invited [3]
application for 5,000,
8% Debentures of
Rs.100 each at a
premium of 2%. Rs.40
were payable on
 Application and
balance on allotment.
Applications were
received for 4,800
shares and accepted in
full. All money duly
received. Journalise the
transactions.
10 ABC Ltd. issued 40,000; [3]
10% Debentures of₹
100 each at par for
cash payable in full
along with the
application.
Applications were
received for 60,000
debentures.
Debentures were
allotted and excess
application money was
refunded. Pass Journal
entries in the books of
the company.
11 Pass the necessary [3]
journal entries for
issue of 1,000, 7%
debentures of Rs.100
each in the following
cases

1. Issued at 5%
premium,
redeemable at a
premium of
10%.

2. Issued at a
discount of 5%,
redeemable at
par.

12 Zee Ltd. took over the [3]

following assets and
liabilities of business of
Usha Ltd. Assets :
Machinery -
 Rs.1,00,000, Furniture
Rs.1,80,000 Stock
Rs.20,000. Liabilities :
Creditors Rs.80,000
The purchases price
was agreed at
Rs.1,08,000. This is to
settle by issue of 12%
Debentures at
premium of 20%. Pass
necessary Journal
entries.
13 Aspi Co. Ltd. issued [3]
20,000; 9 %
Debentures of₹ 100
each at par payable on
application by 1st April
2019. Applications
were received for
20,000 debentures.
Debentures were
allotted on 5th April
2019. Pass necessary
Journal entries in the
books of the company.
14 Complete the following [3]
Journal entries:

15 Fill in the blanks in the [3]

following journal
entries: XY
Ltd.JOURNAL
16 What are debentures? [4]
What are the kinds of
debentures?
17 Journalise the [4]
following transactions :

1. X Ltd. issues₹
2,00,000, 12%
Debentures at a
discount of 5%
redeemable at
par.

2. Y Ltd. issues₹
5,00,000,11%
Debentures at a
discount of 5%
redeemable at a
premium of 7%.

18 Journalise the [4]

following transactions:

1. 400 debentures
issued at₹ 960
each, repayable
at ₹ 1,000 each.

2. 400 debentures
issued at₹
 1,040 each,
repayable at ₹
1,000 each.

3. 400 debentures
issued at₹
1,000 each,
repayable at ₹
1,060 each.

4. 400 debentures
issued at₹ 960
each, repayable
at ₹ 1,060 each.

(The face value of each

debenture is₹ 1,000)

19 ‘Good Blankets Ltd’ are [4]

the manufacturers of
woolen blankets.
Blankets of the
company are exported
to many countries. The
company decided to
distribute blankets free
of cost to five villages
of Kashmir Valley
destroyed by the
recent floods. It also
decided to employ 100
young persons from
these villages in their
newly established
factory at Solan in
Himachal Pradesh. To
meet the requirements
of funds for starting its
new factory, the
company issued 50,000
equity shares of Rs.10
each and 2,000, 8%
debentures ofRs.100
each to the vendors of
machinery purchased
for Rs.7,00,000.Pass
necessary journal
 entries for the above
transactions in the
books of the company.
Also identify anyone
value which the
company wants to
communicate to the
society.
20 On 1st April, 2018, [4]
Amro Ltd. issued
10,000, 9% Debentures
of₹ 100 each at a
discount of 10%
redeemable at par after
5 years. The issue price
is payable along with
the application. The
debentures were
subscribed. It has a
balance of ₹ 1,75,000
in Securities Premium
Reserve. Pass Journal
entries for the issue of
debentures and writing
off the discount and
prepare Discount on
Issue of Debentures
Account.
21 Surya Ltd. purchased [4]
machinery from Mohan
Equipment Ltd. The
company paid the
vendors by issue of
9%debentures and the
balance through an
acceptance in their
favour payable after
three months. The
accountant of the
company while
Journalising the above -
mentioned
transactions left some
items blank. Fill in the
blanks in the given
 below Journal of Surya
Ltd.: Journal of Surya
Ltd.

22 X Ltd. issued 5,000, 8% [4]

Debentures of₹ 200
each at a premium of
6% redeemable at a
premium of 5% after 5
years. According to the
terms of issue, ₹ 80
was payable on
application and
balance on allotment.
Record necessary
Journal entries at the
time of issue of
Debentures.
23 Can the company issue [4]
debentures for
consideration other
than cash? If so, what
accounting Journal
entries such a company
must pass?
24 A Ltd. Company issued [4]
debentures of₹
1,00,000 which were
 issued as follows:

1. For cash at 90%

₹ 50,000
(Nominal)

2. For creditor for

₹ 20,000
Capital
Expenditure in
satisfaction of
his claim ₹
25,000
(Nominal)

3. To Bankers for a
loan of₹ 5,000
as collateral
security ₹
25,000
(Nominal)

The issue (i) and (ii)

are redeemable at the
end of 10 years at par.
Pass Journal Entries
(for first year only).

25 A company took a loan [4]

of₹ 5,00,000 from the
State Bank of India and
issued 10% debentures
of ₹ 8,00,000 of ₹ 100
each as collateral
security. Explain how
will you deal with issue
of debentures in the
books of company.
26 Beeta Ltd. issued 5,000, [4]
9% debentures of₹
500 each. Pass the
necessary journal
entries for the issue of
Debentures in the
books of the company
in the following cases:
 1. When
debentures are
issued at 10%
premium and
redeemable at
par.

2. When
debentures are
issued at par
and redeemable
at 10%
premium.

3. When
debentures are
issued at 5%
premium and
redeemable at
10% premium.

4. When
debentures are
issued at a
premium of
25% to the
vendors for
machinery
purchased for₹
6,25,000.

27 A company issues the [4]

following debentures:

1. 10,000, 12%
debentures of₹
100 each at par
but redeemable
at a premium of
5% after 5
years;

2. 10,000, 12%
debentures of₹
100 each at a
discount of 5%,
but redeemable
 at a premium of
5% after 5
years;

3. 5,000, 12%
debentures of₹
100 each at a
premium of
10% but
redeemable at
par after 5
years;

4. 1,000, 14%
debentures of₹
100 each issued
to a supplier of
machinery
costing ₹
95,000, the
debentures are
repayable after
5 years; and

5. 300, 13%
debentures of₹
100 each as a
collateral
security to a
bank who has
advanced a loan
of ₹ 25,000 to
the company for
a period of 5
years.

Pass the Journal entries

to record the issue of
debentures.

28 ABC Lmited issued [4]

10,000, 12%
debentures of₹ 100
each payable ₹ 30 on
application and the
remaining amount on
the allotment. The
 public applied for
9,000 debentures
which were fully
allotted, and all the
relevant allotment
money was duly
received. Give journal
entries in the books of
ABC Ltd., and exhibit
the relevent
information in the
balance sheet.
29 Gunjan Limited [4]
purchased a running
business from
Vrindavan Limited for
a sum of₹ 25,00,000,
payable ₹ 4,00,000 by
cheque and for the
balance issued 8%
Debentures of ₹ 100
each at 5% premium.
The assets and
liabilities consisted of
the following:

Record necessary
journal entries in the
books of Gunjan
Limited.

30 Reliance Ltd. [4]

purchased machinery
costing₹ 1,35,000. It
was agreed that the
purchase consideration
be paid by issuing 9%
Debentures of ₹ 100
each. Assume
 debentures have been
issued

1. at par and

2. at a discount of
10%.

Give necessary Journal

entries.

31 Exe Ltd. took over [4]

assets of₹ 7,00,000
and liabilities of ₹
60,000 of Wye Ltd. for
the purchase
consideration of ₹
6,60,000. Exe Ltd. paid
the purchase
consideration by
issuing 9% Debentures
of ₹ 100 each at 10%
premium. Pass Journal
entries in the books of
Exe Ltd.
32 Nipa Limited issued₹ [4]
10,00,000 Debentures
of ₹ 100 each at a
premium of 10%,
payable 25% on
application (including
premium) and the
balance on the
allotment. The
debentures were
applied for and the
amount was duly
received. You are
required to give
Journal entries and
prepare Cash Book.
33 Adarsh Cosmetics Ltd. [4]
issued 5,000; 9%
Debentures of₹ 100
each on 1st April, 2019
redeemable at a
 premium of 8% after
10 years. According to
the terms of the
prospectus ₹ 40 is
payable on application
and balance on the
allotment of
debentures.

Pass the necessary

entries

regarding the issue of

debentures. lf amount
towards debentures is
received in a lump sum,
’Debentures
Application and
Allotment Account’ is
used.

34 What are the [4]

alternatives available
to a company for the
allotment of
debentures when there
is an oversubscription
of Debentures?
35 Alka Ltd. issued 5,000, [4]
10% Debentures of₹
1,000 each at a
discount of 10%
redeemable at a
premium of 5% after 5
years. According to the
terms of issue ₹ 500
was payable on
application and the
balance amount on
allotment of
debentures. Record
necessary entries
regarding issue of 10%
Debentures.
36 Bright Ltd. took over [4]
the assets of₹ 6,60,000
 and liabilities of ₹
80,000 of Star Ltd. for
an agreed purchase
consideration of₹
6,00,000 payable 10%
in cash and the balance
by the issue of 12%
Debentures of₹ 100
each. Give necessary
Journal entries in the
books of Bright Ltd.,
assuming that; Case
(a): The debentures
are issued at par. Case
(b): The debentures
are issued at 20%
premium. Case (c):
The debentures are
issued at 10%
discount.
37 Journalise the [4]
following:

1. A debenture
issued at₹ 95,
repayable at ₹
100.

2. A debenture
issued at₹ 95,
repayable at ₹
105.

3. A debenture
issued at₹ 100,
repayable at ₹
105.

The face value of

debenture in each of
the above cases is₹
100.

38 Larson and Turbo Ltd. [4]

Issued 50,000 8%
debentures of Rs.100
each payable on.
 Application at par and
redeemable at par any
time after 7 years from
the date of the issue.
Record necessary
entries for the issue of
debentures in the book
of Company.
39 Fill the missing values [4]
in the following:
JOURNAL OF AB LTD.

40 X Ltd obtained a loan of [4]

Rs.4,00,000 from IDBI
Bank. The company
issued 5,000, 9%
debentures ofRs.100
each as a collateral
security for the same.
Show how these items
will be presented in the
Balance Sheet of the
company.
41 X Ltd. issued 2,000, [4]
15% debentures of₹
100 each at Par,
payable as follows: ₹
25 on Application; ₹ 25
on Allotment and ₹ 50
on First and Final Call.
Applications were
received for 3,000
 debentures.
Applications for 1,600
debentures were
accepted in full.
Applications for 600
debentures were
allotted 400
debentures and the
rest were rejected. All
moneys due were
received except the
final call on 100
debentures. Pass
necessary journal
entries.
42 (Issue of Debentures to [4]
Vendors at a
Discount).Exe Ltd.
purchased assets of ₹
8,40,000and took over
liabilities of ₹ 80,000of
Whe Ltd. at a value of ₹
7,20,000. Exe Ltd.
issued 10%Debentures
of ₹ 100each at
10%discount in full
satisfaction of the
price. The company
decided to write off
Discount on Issue of
Debentures from
Securities Premium
Reserve of ₹
1,00,000.Pass Journal
entries in the books of
Exe Ltd.
43 On 2nd March, 2016 L [4]
and B Ltd issued 635,
9% debentures of₹
500 each. Pass
necessary journal
entries for the issue of
debentures in the
following situations
 1. When
debentures
were issued at
5% discount,
redeemable at
10% premium.

2. When
debentures
were issued at
12% premium,
redeemable at
6% premium.

44 Sargam Ltd issued [4]

Rs.1,00,000, 6%
debentures of Rs.10
each at a premium of
Rs.2 per debenture on
1st April, 2012. The
issue was fully
subscribed. Interest
will be paid at the end
of each financial year.
Pass necessary journal
entries for the year
2012 - 13.
45 Vishwas Ltd. issued [4]
2,000; 9% Debentures
of₹ 100 each payable
as follows: ₹ 25on
application;₹ 25 on
allotment and ₹ 50 on
first and final call.
Applications were
received for all the
debentures along with
the application money
and an allotment was
made. Call money was
also received on the
due date. Pass
necessary Journal
entries in the books of
the company.
46 Kamal Ltd. issued [6]
5,000, 12% Debentures
of₹ 100 each, payable
as follows: ₹ 10 on
application, ₹ 15 on
allotment, ₹ 30 on first
call and ₹ 45 on second
and final call. A person
who holds 400
debentures paid the
amount of first and
second calls with the
allotment. Another
person who is holding
100 debentures failed
to pay the amount due
on allotment. He,
however, pays this
amount along with the
first call money. Pass
entries.
47 Trupati Ltd. issued [6]
20,000, 11%
Debentures of₹ 100
each, payable as
follows: ₹ 25 on
application; ₹ 35 on
allotment and ₹ 40 on
first and final call. All
the debentures were
applied. A, the holder
of 500 debentures paid
the entire amount on
his holding on
allotment and B, the
holder of 100
debentures failed to
pay the allotment and
final call. Pass entries.
48 Pass necessary Journal [6]
entries relating to the
issue of debentures for
the following:

1. Issued₹
 4,00,000; 9%
Debentures of ₹
100 each at a
premium of 8%
redeemable at
10% premium.

2. Issued₹
6,00,000; 9%
Debentures of ₹
100 each at par,
repayable at a
premium of
10%.

3. Issued₹
10,00,000; 9%
Debentures of ₹
100 each at a
premium of 5%,
redeemable at
par.

49 J Ltd. issued₹ [6]

20,00,000, 15%
Debentures at 8%
discount. Debentures
are to be redeemed in
the following manner:

Pass journal entry for

the issue of Debentures
and prepare Discount
on Issue of Debentures
Account for 5 years.

50 Best Barcode Ltd. took [6]

a loan of₹ 5,00,000
from a bank giving ₹
6,00,000; 9%
 Debentures as
collateral security. Pass
Journal entries
regarding issue of
debentures, if any, and
show this loan in the
Balance Sheet of the
company.
51 X Ltd. issued 25,000, [6]
9% Debentures of ₹
100 each at a premium
of ₹ 4 per debenture
on 1st April, 2017. On
the same date it
purchased fixed assets
of ₹ 10,00,000 and
took over current
liabilities of ₹ 70,000
of YLtd. and paid ₹
4,00,000 in Cash and
remaining by issue of ₹
5,00,000, 9%
debentures at a
premium 6%. On the
same date it took a loan
from the Bank for ₹
6,00,000 and issued
9% debentures as
collateral security. Give
entries and the extract
of Balance Sheet on
31st March, 2018.
Ignore interest.
52 1. On 1st April, [6]
2015, Mayfair
Ltd. issued
4,000 9%
debentures of₹
100 each at a
discount of 5%
redeemable at a
premium of 8%.
The debentures
were
redeemable on
 31st March,
2019. The
company
created the
necessary
minimum
amount of
debenture
redemption
reserve and
purchased the
required
amount of
debenture
redemption
investments as
per the
provisions of
Companies Act,
2013. Pass the
necessary
journal entries
for redemption
of debentures.

2. Hero Ltd.
purchased plant
and machinery
for₹ 18,00,000
from Pearl
Machines Ltd.
payable ₹
3,00,000 by
drawing a
promissory note
and the balance
by issue of 9%
debentures of ₹
100 each at a
premium of
20%. Pass the
necessary
journal entries
in the books of
Hero Ltd. for the
 above
transactions.

53 M Ltd. issued 10,000, [6]

8% debentures of₹
100 each at a premium
of 10% on 1 - 4 - 2017.
It purchased fixed
assets of the value of ₹
2,50,000 and took over
current liabilities of ₹
40,000 and issued 8%
debentures at a
premium of 5% to the
vendor. On the same
date it took loan from
the Bank for ₹
1,00,000 and issued
8% debentures as
Collateral Security.
Record the relevant
journal entries in the
books of M Ltd. and
prepare the extract of
balance sheet on 31 - 3
- 2018. Ignore interest.
54 India Ltd. made the [6]
following issue of 6%
debentures:

1. For cash at 90%,

6,000
debentures of₹
100 each.

2. 1,100
debentures of₹
100 each to a
creditor
regarding
machinery
costing ₹
1,00,000.

3. To bank for a
loan of₹
 7,00,000 as
collateral
security 10,000
debentures of ₹
100 each.

The issue (i) and (ii)

are redeemable at the
end of five years at par.
Pass Journal entries for
first year only.

55 Maneesh Ltd. issued [6]

5,000, 12% debentures
of₹ 100 each at a
discount of 6% to be
redeemed as follows:
1st Year: Nil; 2nd Year:
₹ 2,50,000; 3rd Year:
Nil; 4th Year: ₹
2,50,000. Show the
Discount on Issue of
Debentures Account
for the period of 4
years.
56 A Company had₹ [6]
10,00,000, 12%
Debentures
outstanding as on 1st
April, 2017. During the
year company took a
loan of ₹ 2,00,000 from
the State Bank of India
for which the Company
placed with the bank
debentures for ₹
2,50,000 as Collateral
Security. Pass journal
entries, if any. Also
show how the
Debentures and Bank
Loan will appear in the
Company’s Balance
Sheet as at 31st March,
2018.
57 Pass necessary Journal [6]
entries relating to the
issue of debentures for
the following:

1. Issued₹ 28,000;
10%
Debentures of ₹
100 each at a
premium of
15%
redeemable at
par.

2. Issued₹ 30,000;
10%
Debentures of ₹
100 each at a
premium of
10% and
redeemable at a
premium of
15%.

3. Issued₹ 80,000;
10%
Debentures of ₹
100 each at par
repayable at a
premium of
10%.

58 Explain the meaning [6]

and accounting
treatment of
debentures issued as
collateral security.
59 Surya Ltd. issued [6]
2,500, 15% Debentures
of₹ 100 each at a
discount of 10%
payable as follows: ₹
25 on the application;
₹ 25 on the allotment
and the balance on
First Call. Applications
 were received for
2,000 debentures and
the allotment was
made. All the money
was duly received.
Expenses on the issue
of debentures
amounted to ₹ 8,000.
Directors decided to
write off 1/5th of
Expenses on Issue
A/c and Discount on
Issue of Debentures
A/c from Statement of
Profit and Loss each
year. Pass journal
entries (for the first
year only).
60 1. On 15 - 2 - [6]
2017 A Ltd.
invited
applications for
issue of
1,00,000, 9%
debentures of₹
100 each at a
discount of 6%,
redeemable at
par after 3
years. The full
amount was
payable on
application and
the debentures
were issued on
15 - 3 - 2017.
Pass the journal
entries for the
above
transactions.

2. R Ltd. issued
10,000, 12%
Debentures of₹
100 each at a
 discount of 5%.
Pass Journal
entries.

61 A Ltd. company issued [6]

a 9% Debenture of the
face value of₹ 6,00,000
at a discount of 5% on
1st April 2011. The
debenture is repayable
by the annual drawing
of ₹ 2,00,000
commencing from the
end of 4th year. Show
the Discount on Issue
of Debentures A/c , in
the company’s ledger
for the period of
duration of debentures.
Accounts are closed on
31st March each year.
62 R Ltd. issued 8,000, [6]
13% Debentures of₹
100 each at a discount
of 5% payable as
follows:

Public applied for

6,000 debentures. All
the moneys were duly
received. Expenses on
issue of debentures
amounted to₹ 20,000.
Directors decided to
1
write off th of
5
Expenses on Issue
A/candDiscount on
Issue of Debentures
A/cfrom Statement of P
& L each year. Pass
 journal entries (for
first year only).

63 B. Ltd. purchased [6]

assets of the book
value of₹ 4,00,000 and
took over the liability
of ₹ 50,000 from
Mohan Bros. It was
agreed that the
purchase
consideration, settled
at ₹ 3,80,000, be paid
by issuing debentures
of ₹ 100 each. What
Journal entries will be
made in the following
three cases, if
debentures are issued:

1. at par,

2. at a discount of
10% and

3. at a premium of
10%.

It was agreed that any

fraction of debentures
be paid in cash.(Note:
Goodwill ₹ 30,000)

64 On 1st April, 2018, [6]

Sunshine Ltd. issued₹
10,00,000, 15%
Debentures of ₹ 100
each at 8% discount
payable: ₹ 40 on
application, and The
balance on allotment.
These debentures were
to be redeemed at a
premium of 5% after
five years. All the
debentures were
subscribed for by the
 public. Interest on
these debentures was
to be paid half - yearly
which was duly paid by
the company. You are
required to:

1. Pass Journal
entries in the
first year of
debenture issue
(including
entries for
debenture
interest.)

2. Prepare 15%
Debentures
Account for the
year ending
31st March,
2019.

65 On 1st April, 2016, [6]

Sunstar Ltd. issued
10,000 12%
Debentures of₹ 100
each at a discount of
5% redeemable at par
as follows:

Interest is paid
annually on 31st
March.You are
required to pass the
Journal entries,
including for interest
for the three years and
prepare Discount on
Issue of Debentures
Account.

66 On 1st April 2018, [6]

 Relaxo Ltd. purchased
assets of₹ 4,30,000
and took over liabilities
of ₹ 90,000 of Greg Ltd.
at an agreed value of ₹
3,80,000. It issued to
the vendor, 10%
Debentures of ₹ 100 at
5% discount,
redeemable at par after
5 years, in full
satisfaction of the
purchase price. On the
same date, the
company issued 500,
11% Debentures of ₹
100 each as a collateral
security to a bank who
had a advanced a loan
of ₹ 45,000 to it for a
period of 3 years and
also issued 5,000, 12%
Debentures of ₹ 100
each at par,
redeemable after 3
years at 5% premium.
Additional
Information: The
interest on debentures
is paid half yearly on
30th September and
31st March each year.
Tax deducted at source
@20%. The Company
had ₹ 1,20,000 in its
Securities Premium
Reserve Account at the
end of the year(Ignore
interest on a bank
loan). You are required
to pass Journal entries
in the books of Relaxo
Ltd. for the year ended
31st March 2019.
67 During the year ended [6]
31st March 2019,
Anderson Ltd. issued
12% Debenture of₹
100 each, as per the
details are given below:

1. 900 Debentures
issued as
collateral
security to a
bank against a
loan of₹ 60,000.

2. The
underwriters
were to be paid
a commission of
₹ 48,000. 25%
of the amount
was paid to
them in cash
and the balance
was paid by the
issue of
Debentures at a
discount of 10%
to be redeemed
at par.

3. A machine was
purchased for₹
2,18,500. The
vendor was paid
by the issue of
Debentures at a
premium of
15% to be
redeemed at
par.

4. 5,000
Debentures
were issued to
the public at a
5% premium, to
be redeemed at
a premium of
 5%.

The company wrote off

all capital losses arising
from the issue of
Debentures at the end
of the year from its
capital profits and if
need be from its
revenue profits.You
have required to
Journalise the above
transaction in the
books of Anderson Ltd.

68 Pass Journal entries for [6]

issue of debentures in
each of the following
transaction:

1. Star Ltd. issues

30,000; 10%
Debentures of₹
100 each at a
discount of 5%
to be repaid at
par at the end of
5 years.

2. Green Ltd.
issues 10%
Debentures of₹
100 each for the
total nomial
(face) value of ₹
40,00,000 at a
premium of 5%
to be redeemed
at par at the end
of 5 years.

3. Moon Ltd.
issues₹
50,00,000; 10%
Debentures of ₹
100 each at par
but redeemable
 at the end of 10
years at 105%.

4. Strong Ltd. issue

₹ 60,00,000;
10%
Debentures of ₹
100 each at a
discount of 5%
repayable at a
premium of
10% at the end
of 5 years.

5. Smart Ltd. issue

₹ 70,00,000;
19%
Debentures of ₹
100 each at a
premium of 5%
redeemable at
110% at end of
10 years.

69 X Ltd. raised a bank [6]

loan of₹ 10,00,000 and
issued by way of
collateral security
10,000, 12%
Debentures of ₹ 100
each. The Company
further issued to public
15,000, 12%
Debentures of ₹ 100
each at 2% discount
payable ₹ 30 on
application, ₹ 18 on
allotment, ₹ 20 on first
call and the balance a
month later. The public
applied for 20,000
debentures.
Applications for 12,000
debentures were
accepted in full,
applications for 4,000
 debentures were
allotted 3,000
debentures and the
remaining applications
were rejected. All
amounts were duly
received. Prepare
journal entries.
70 Z Ltd. issued 20,000, [6]
12% Debentures of₹
100 each. Give journal
entries if the
Debentures are:

1. issued at par,

2. issued at a
discount of
10%, and

3. issued at a
premium of
10%
(redemption
being in all
these cases at
par).

Also, show the entries

which will be made if
the Debentures are
repayable at a
premium of 5% but are
issued (a) at par, and
(b) at a discount of
10%.

71 (Issue of Debentures at [6]

Premium, Amount
Payable in Instalments,
Oversubscribed, Pro
rata Allotment).Exe
Ltd. issued 10,000; 9%
Debentures of₹ 100
each at a premium of
10% payable₹ 25 on
 application,₹ 35 on
allotment (including
premium) and the
balance on first and
final call. Applications
were received for
15,000 debentures.
Allotment was made on
pro rata basis excess
application money
being applied towards
amount due on
allotment. All sums due
were received by the
company on due dates.
Journalise the above
transactions on the
books of Exe Ltd. and
prepare extract of the
Balance Sheet showing
Securities Premium
Reserve and
Debentures.
72 Ashwathi Ltd. issued [6]
40,00,000, 10%
Debentures of₹ 50
each at a discount of
8% on April 1, 2010,
redeemable in four
equal annual
installments starting
with March 31, 2013.
The securities
premium account
shows a balance of ₹
70,00,000. Compute
the amount of
discount/loss to be
written off and also
record the journal
entries in the books of
Ashwathi Ltd.
73 X Ltd. Had [6]
Rs.12,00,000, 11%
Debentures
 outstanding on 1st
April, 2012. During the
year, it took a loan of
Rs.4 Lakh from Canara
Bank for which
company deposited
debentures of Rs. Lakh
as collateral security.
Pass journal entries
and show how these
transactions will
appear in Balance
Sheet of the company.
74 Show by means of [6]
journal entries how
would you record the
following issues.

1. A Ltd. issues₹
5,00,000, 13%
Debentures at a
discount of 8%
redeemable at
par.

2. B Ltd. issues₹
6,00,000, 12%
Debentures at a
discount of 6%
redeemable at a
premium of 7%.

3. C Ltd.
purchased plant
and machinery
for₹ 8,00,000
payable as to ₹
2,30,000 in cash
and the balance
by an issue of
10%
Debentures of ₹
100 each at a
discount of 5%.

4. D Ltd. issued
 500, 11%
Debentures of₹
100 each as a
collateral
security to a
Bank who has
advanced a loan
of ₹ 45,000 to
the Company for
a period of 7
years.

5. E Ltd. issued₹
2,20,000
Debentures to a
creditor for ₹
2,00,000 Capital
Expenditure in
satisfaction of
his claim.

75 Pass Journal entries for [6]

issue of debentures in
each of the following
alternative cases:

1. 10% Debenture
of₹ 100 each
issued at ₹ 100,
repayable at ₹
100.

2. 10% Debenture
of₹ 100 each
issued at ₹ 95,
repayable at ₹
100.

3. 10% Debenture
of₹ 100 each
issued at ₹ 105,
repayable at ₹
100.

4. 10% Debenture
of₹ 100 each
issued at ₹ 100,
 repayable at ₹
105.

5. 10% Debenture
of₹ 100 each
issued at ₹ 95,
repayable at ₹
105.

6. 10% Debenture
of₹ 100 each
issued at ₹ 105,
repayable at ₹
110.