Venus Ltd is a real estate company. To discharge its corporate social responsibility, it decided to construct a night shelter for the homeless. The company took over assets of = 10,00,000 and liabilities of € 1,80,000 of Cayns Ltd for = 7,60,000. Venus Ltd issued 9% debentures of % 100 each at a discount of 5% in full satisfaction of the purchase consideration in favour of Cayns Ltd. Pass necessary journal entries in the books of Venus Ltd. for the above transactions. - JOURNAL - . : Date | . Particulars UF >| Ame (cr) | Assets Ale Or! | 10,00,000" To Liabilities A/c | 1,80,000 To Cayns Ltd 7,60,000 To Capital Reserve A/c | } 60,000 (Being business purchased of Cayns Ltd.) | | Cayns Ltd Or 7,60,000_ Discount on Issue of Debentures A/c (8,000 x 5) Or | 40,000 To, 9% Debentures A/c (8,000 x 100) 8,00,000 (Being 9% debentures issued at 5% discount to Cayns Ltd) LearnCBSE,in Working Notes: 7,60,000 Number of debentures Issued = 4y5-<- = 8,000 debentures, 9% debenturesOn 2nd March, 2016 L and B Ltd issued 635, 9% debentures of % 500 each. Pass necessary journal entries for the issue of debentures in the following situations (i) When debentures were issued at 5% discount, redeemable at 10% premium. ii) When debentures were issued at 12% premium, redeemable at 6% premium JOURNAL Date Particulars [LF Tame (On | Amt (cr (i) | Bank Ale 635 x 475) Dr, | 3,01,625! To Debenture Application and Allotment A/c +3,01,625 (Being application money received on 635 debentures of € 475 each) Debenture Application and Allotment A/c Dr 3,021,625} Loss on Issue of Debentures A/c (31,750 +15,875) Or. 47,625, To 9% Debentures A/c (635 x 500) | 317,500 To Premium on Redemption A/c (635 x 50) | 31,750 (Being the issue of 635 debentures at 5% discount, redeemable at 10% | premium) i (i) | Bank Ale (635 x 560) Dr/ | 3,55,600 To Debenture Application and Allotment A/c | 3,55,600 |_ (Being application money received on 635 debentures of & 560 each) Debenture Application and Allotment A/c Or 3,55,600 | Loss on Issue of Debentures A/c (635 x30) Dr! =| 19,050 To 9% Debentures A/c (635 x 500) 3,17,500 To Securities Premium Reserve A/c (635 x 60) 38,100 To Premium on Redemption A/c (635 x 30) | 19,050 | Being the issue of 635 debentures at 12% premium and redeemable at 6% premium) _LearnCBSE.inSSS Lid issued 25,000, 10% debentures of € 100 each. Give journal entries and the balance sheet in each of the following cases when (i) The debentures were issued at a premium of 20% (ii) The debentures were issued as a collateral security to bank against a loan of % 20,00,000. (iii) The debentures were issued to a supplier of machinery costing € 28,00,000 as his full and final payment o JOURNAL Dae Particulars LF | Ame (on | Amt cor Bank Ae @5,000%3200 or) | 30,00,000 To Debenture Appiation and Allotment Ale | 30,00,000 (Geing application money received) Debenture Appizaton and Allotment A or! | 30,00,000 ‘To10% Debentures Ale (28,000. 100) 25,00,000 To Secures Premium Revere Ae (25,000 20) 300,000 (Seley aopication money warterred to 10% Sebertres accaurt) Balance Sheet asa. Parteulars | Note No. Amt |. EQUITY AND LIABILITIES 1. Sharcholdrs! Funds Reserves and Surpls 1 2,00,000 2. Non-currnt Liabilities Long-term Borrowings 2 | 2,00,000 Tous! 30,00,000 1 ASSETS 1, Curent Assets ‘Cash and Cash Equivalents 3 30,00,000 Tota 30,00,000 ‘ots to Accounts LearnCBSE.in Particulars ‘Amt 1. Reserves and Supls ‘Secures Premium Resere | 50,000 2. Non-current Llabites 10% Debentures 25,00,000 ‘2 Cash and Cash Equivatents Cash at Bank 30,00,000Question 17: Deepak Ltd purchased furniture of Rs. 2,20,000 from M/s. Furniture Mart. 50% of the amount was paid to M/s. Furniture Mart by accepting a Bill of Exchanged and for the balance the company issued 9% Debenture of Rs. 100 each at a premium of 10% in favour of M/s. Furniture Mart. Pass Journal entries in the books of Deepak Ltd. Answer 17: Books of Deepak Ltd. Journal Entries DoT ee CT ‘umiture A/c Dr. 20, To Mis. Fumiture Mart 2,20,000 (Being purchased furniture of Rs. 220,000 from Ms. Fumiture Mart) ‘Mls. Furniture Mart Dr. 1, 10,000 To Bills Payable Alc 4,10,000 (Being 50% of the amount was paid to Ms. Fumiture Mart by acceptinga Bill of Exchange or Bills Payable) Ws. Furniture Mart Dr. 710,000 To 9% Debenture A/c 4,00,000 To Securities Premium Alc 10,000 (Being 1,000 debentures of 100 each issued to Mis. Fumiture Mart ata premium of 10% in satisfaction of purchase consideration) Point of Knowledge:- Number of Debentures to be issued = .000 DebenturesJournalize the following: (a) A debenture issued at Rs.95, repayable at Rs. 100. (b) A debenture issued at Rs.95, repayable at Rs. 105. (c) A debenture issued at Rs.95, repayable at Rs. 105. The face value of debenture is Rs. 100 in each of the above cases.Journal Entries Ce Bank A/c Dr. 95 To Debenture Application A/c 95 (Being debenture application money received) Debenture Application A/e Dr. 95 Discount on Issue of Debentures A/c 5 To Debenture A/c 100 (Being a debenture issued at Rs. 95, repayable at Rs. 100) (b) Debentures issued at a discount and redeemable at premium: Journal Entries Cen Bank A/c Dr. 95 To Debenture Application A/c 95 (Being debenture appli money received by the company) Debenture Application A/e Dr. 95 Discount on Issue of Debentures A/c Or. 5 Loss on Issue of Debentures A/c Or. 5 To Debentures A/c 100 To Premium on Redemption A/c S (Being a debenture issued at Rs. 95, repayable at Rs. 105)(c) Debenture issued at a par and redeemable at a premium: Journal Entries Cerny Bank A/c Or. 100 To Debenture Application A/c 100 (Being debenture application money received by the company) Debenture Application A/c Dr. 100 Loss on Issue of Debentures A/c Dr. 5 To Debentures A/c 100 To Premium on Redemption A/c 5 (Being a debenture issued at Rs. 100, repayable at Rs. 105)41. Agam Ltd. issued 40,000; 9% Debentures of & 100 each on 1st April, 2023 at a discount of 10% redeemable at a premium of 10%. ‘Assuming that the interest was paid half yearly on 30th September and 31st March, give Journal entries relating to debenture interest for the half year ended 31st March, 2024. [Ans.: Total interest paid—X 3,60,000) Solution:- Fourmed Batt] Paxticulinn cel OS cr Brake | Bebonture Tnterest- Ata. Cyn 600vDK FF KS fx) dr 180800 To Sebenturc holder AL [ Qo5tD ( Thteseat on Achennr 1% drs ‘waww.commerceschool.in Be bertinw holoferr AZ 65: 180000 To Bank “tz. 180000 IC Tntcrc&t on Aeben ture Peuy ay 3ior2| Behenture. Interest A Cyo 000K 7% K 6/2) dy 180000 To Debenturz holder ACO 130000 KC Tatexcat om Scbentung 1s drs ‘www.commerceschool.in Bebenturx holder WL és} | 180000 To Bank Ata 130000 IC Tntcreat- on Bebernturr Peust ue alspesa| Pryfit A (oss AZ, _www.commerceschoolin gy) | S600» To BebenHus Interest AQ 260000 Ldchentune Trtereat. tsanifons to Pac AC _}21, Exe Ltd. purchased assets of the book value 4,00,000 and took over the liabilities of 50,000 from Mohan Bros. ‘was agreed that the purchase consideration, settled at °3,80,000, be paid by issuing debentures of 100 each, ass Journal entries if debentures are issued: (a) at par, (b) at a discount of 10% and (c) ata premium of 10%. ‘twas agreed that any fraction of debentures be paid in cash. Ans. Goodwill 30,000; Case (a) 3,800 Debentures of 100 each; Case (b) 4,222 Debentures of % 100 each and paid cash 8 20; Case (c) 3,454 Debentures of & 100 each and paid cash ® 60.) Solution: Com-L Teun a) Bab] Porealans rz = 1) [AascPa AC mies Grodcoigd m0, wwwcommerceschoolin |_| “S000 To Uabilitie Me. To Mohan Brg Mic Busines Puxchorc of Mohan Brox 2 | Mohan Brox AC oy 380060 To (0% Bebenfune Ate C 3800x100) 380000 Debertune euest ty Mohan Bins af Rar doskingy Woke > Oumber of Sebortunes — 3 = 32800 Towed Sah [ Parkicolans ce _o Ce D | Asse ACL oe Yooord Goodunten M2. wwwcommerceschool.in ty. 300d To Gabilitie Mo. S0000 To Mohan Brg Ate 390000 Butines Puxchoc of Mohan Brox A 2) |Mohan Brg Ate. av] | 380000 Discount on dcee of Bebentincs Alo (YRaa Ko) YRRIO To / Bebenturct Ae CY&22xI00) 422200 To cash (a. www.commerceschool.in 20 YAAL BebentiAn PRUE to Moham BIOL for F (v9 Fach of (0% Sticount 4 Bafance mn cash cootteingy Note i> Number of eben = 380000 ‘wwwecommerceschool. in an = 4RRQQuestion 18: Star Ltd. took over the assets of € 6,60,000 and liabilities of 80,000 of Moon Ltd for ® 6,00,000. Give necessary Journal enties in the books of Star Ltd. assuming that. Case (a): The purchase consideration was payable 10% in cash and the balance in 5,400; 12% Debentures of & 100 each. Case (b): The purchase consideration was payable 10% in cash and the balance in 4,500; 12% Debentures of 8 100 each issued at 20% premium. Answer: Journal Expert Coaching for Maths, Science Class 9 to 12th & Commerce Class +1 & +2 ih tutor Class 12 Accountancy TS Grewal Solutions Vol 2 classes Chapter 9 Issue of Debentures Debit | Credit Amount | Amount Date Particulars Le.| @ ®@ ‘Assets Ale Dr 660,000 Goodwill A/c (Balancing Figure) or. 20,000 To Liabilities A/e 80,000 To Moon Lid. 6,00,000 (Purchase of business took over) a. | Moon Ltd or. 600,000 To Cash A/c 60,000 To 12% Debentures A/c 5,40,000 (Purchase consideration discharged) b. | Moon Ltd or. 600,000 To Cash A/c 60,000 To 12% Debentures A/c 450,000 To Security Premium Reserve A/c 90,000 (Purchase consideration discharged)[(A)Passage-Based 2 ‘ead the following source carefully and answer the - questions that follow: “Hoslth2Wealth Health Ltd. had a share capital of €80,00,000 @ shares of €100 each and 20,000, 8% Debentures ach as part of capital employed. The company needed of &55;00,000 for which they decided to issue ch a tay that they got the required funds after es ofthe same class as earlier, ata 10% premium. ‘were to be redeemed at a 20% premium after entures were issued on 01 October, 2021. ‘primary reason for Health2Wealth Ltd. ebentures at a premium? tory requirements oes ®® (4 mea eed | Case-Based Questions 4, What will be the amount of loss on insse of debentures? (a) 10,00,000 (b) 5,00,000 (©) 15,00,000 (4) None of these Hoe @®@® (B) Data-Based Questions Read the following source carefully and answer the ‘questions that follow: Nikhil Technologies Ltd. issued 5,000; 9% Debentures of 100 each at a premium of &20, payable as follows: (| 840 including premium of €10 on application (ii) | 240 including premium of 210 on allotment (ii) | Balance as first and final call. Applications were received for 5,000 debentures and allotment was made to all the applicants. All the calls ‘were made, and amounts received. 1. The amount of money received during application is: (a) €1,00,000 (b) %4,00,000 (©) %2,00,000 (a) 250,000 Bi i0e81| © © 2. What amount of money received on application was transferred to the Securities Premium Reserve Account: (a) 35,00,000 (b) 350,000 (©) %1,00,000 (a) %2,00,000 Bi 00881} © © 3. is the balance amount per debenture to be received at the first and final cal. (a) %20 (b) HO. (¢) 830 (@) 10 ZY 1088) ® © 4, The total interest payable on the debentures issued for ‘one year is, (a) 45,000 (b) 50,000 (©) 42,000 (@) 67,000 BY (0881 @ @LS aa ye 2 JAEESO) oswaai CBSE Competency Focused Questions, ACCOUNTANCY, I2s° however, cannot allot more debentures both parties by facilitating business operations and company i ee for subscription. a a financial planning. i ‘over subscri i 3. (d) When einer of debentures applied for is money (eae for adjustment towards more than the number of debentures offered to row overt and the respective calls to be made. +50,00,000 To 8% Debentures A/c ae 7 ps 5,00,000 oT ‘issuing debentures at a premium, A company ‘To Securities Premium an raise funds over and above the face value of To Premium on Redemption oo issued by it in the form of securities ofDekentires Ave 10,00,000 a redemption premium incentivizes to subscribe to the debentures by them with a higher return on their upon redemption. (B) Data-Based Questions 1. (6) 5,000 x %40 = %2,00,000 2. (b) 5,000 x 10 = 250,000 3. (b) Amount to be received on first and final call Dr 55,00,000 Dr.10,00,000 4, (a) Interest on Debentures = 50.009 45,000Question 2: A Ltd. issued 2,000; 9% Debentures of Rs. 100 each on the following terms: Rs.20 on applications ;Rs. 20 on allotment; Rs. 30 on first call ; Rs. 30 on final call. The public applied for 2,400 debentures. Applications for 1,800 debentures were accepted in full. Applications for 400 debentures were allotted 200 debentures and applications for 200 debentures were rejected. Pass necessary Journal entries. Answer 2: Books of A Ltd. “Journal coy a ims Bank Or. T0.9% Debenture Application Ale (Being debenture application money received on 2,400 @ Rs. 20 per debenture application) "BR Debentare Application: Or FEO To.9% Debentures Ale *40,000 To.9% Debentures Allotment Ale ‘4000 ToBank Ae 4.000 (Being debenture application money due on 2,000 debentures @Ps. 20 per debenture, adjustment made on 200 debenture ‘application money @ Rs. 20 per application towards sum due (on allotment money and fe refund made on rest 200 debenture application @Rs. 20 per debenture application) 3% Debentare ATotmeENTAE Br BOO To9% Debentures Alc 40,000 (Being Debenture allotment money due on 2,000 debentures @ Fs. 20 per debenture) Bank Or To9% Debentures Allotment Ac 35,000 {Being debenture allotment money rected ff the remsinng amount afler deducting Rs. 4000.catried forwa debentures application money) Debeniture FISICA AE Dr SOO ‘To9% Debentures Alc (Being debenture first call money due on 2,000 9% debenture @Rs. 20 per debenture) Banke Dr BOO ‘ToDebenture FirstCall Ale (Being debenture frst call money received on 2,000 debentures @Rs. 30 per debenture) Debenture Final Calle or SOOT To9% Debentures Ac (Being Debentures final cal money due on 2,000 9% Debentures @ Rs. 30 per debenture) ane Or SOO ToDebenture Final all Ac 60,000 (Being Debenture ‘eceived on 2,000 9% Debenture at Rs. 30 per debenture Point of Knowledge:- 1. Amount of Instaliments:-on allotment money and the refund made on rest 200 i debenture application @Rs. 20 per debenture application) f | 9% Debenture Allotment Alc Or 40,000 To 9% Debentures Alc 40,000 (Being Debenture allotment money due on 2,000 debentures @ Rs. 20 per debenture) KAT Dr. 36,000 To 9% Debentures Allotment Ac 36,000 (Being debenture allotment money received for the remaining amount after deducting Rs. 4,000 carried forward from debentures application money) Debenture FirstCall Alc ~ Or 60,000 To 9% Debentures Alc 60,000 (Being debenture first call money due on 2,000 9% debenture @Rs. 30 per debenture) Bank Ale To Debenture FirstCall Aic 60,000 (Being debenture first call money received on 2,000 debentures @Rs. 30 per debenture) | Debenture Final Call Ale Fr 60,000 T09% Debentures Alc 60,000 (Being Debentures final call money due on 2,000 9% Debentures @ Rs. 30 per debenture) Bank Ale Dr. 60,000 To Debenture Final Call Aic 60,000 (Being Debenture final call received on 2,000 9% Debenture at Rs. 30 per debenture) Point of Knowledge:- 1. Amount of Installments:- Application Rs. 20 Allotment Rs. 20 First Call = Rs. 30 Second and Final Call = _Rs.30 Total = 2. _Statement of Allotment:- Number of Application Received | Number of Shares Allotted (i) 1,800