Question

43. Kitply Ltd. issued 200,000, 10% Debentures at a discount of 5%. The terms of issue provide there
at the end of 4 years. Kitply Ltd. has a balance of 75,00,000 in Securities Premium Reserve. Pass the
journal entries for issue of debentures and writing off the discount​

Answer 1

Necessary entries are given below. Hope this will help you.

Explanation:

Bank A/c Dr.  19000000

To 10%Debenture App And Allot A/c 19000000

This is the first entry for the amount of money received from the issue of debentures.

10% debenture App and Allot A/c Dr. 19000000

Discount on 10% Debenture A/c Dr. 1000000

                         To 10% Debenture A/c 20000000

This entry is for transfer of application and allotment money to  debenture account and transfer of discount.

Securities Premium Reserve A/c Dr. 1000000

    To Discount on 10% Debenture A/c 1000000

The whole amount of discount can be written off against securities premium account as we have sufficient balance in securities premium reserves.