Question

A limited company issued ₹ 10,00,000; 9% Debentures at a discount of 6% on 1st April, 2014. These debentures are to be redeemed equally, in 5 annual installments starting from 31st March, 2015. Discount on Issue of Debentures is written off during the tenure of debentures.
Pass the journal entries for issue of debentures and writing off the discount.

Answer 1

Answer:

A limited company issued ₹ 10,00,000; 9% Debentures at a discount of 6% on 1st April, 2014. These debentures are to be redeemed equally, in 5 annual installments starting from 31st March, 2015. Discount on Issue of Debentures is written off during the tenure of debentures.

Pass the journal entries for issue of debentures and writing off the discount. contact me if any query hope you are having a good day contact me if any query

Answer 2

Solution:

                                           Journal  

Date     Particulars                                                  Dr. Rs.      Cr. Rs.

2014

1st April     Bank A/c                                       Dr.    9,40,000

To Debenture Application and Allotment A/c                        9,40,000

(Being application money received on issue of Debenture)

Debenture Application and Allotment A/c    Dr. 9,40,000

Discount on Issue of Debenture A/c              Dr. 60,000

        To 9% Debenture A/c                                                   10,00,000

(Being application money transferred to Debentures A/c)

2015 31st Mar

               Statement of Profit and Loss Ac     Dr. 20,000

        To Discount on Issue of Debenture Ac                         20,000

(Being discount on Issue of Debenture written off)

2016 31st Mar

                Statement of Profit and Loss A/c      Dr.   16,000

         To Discount on Issue of Debenture A/c                          16,000

(Being discount on Issue of Debenture written off)  

2017 31st Mar

                  Statement of Profit and Loss A/c     Dr. 12,000

       To Discount on Issue of Debenture A/c                             12,000

(Being discount on Issue of Debenture written off)

2018 31st Mar

                     Statement of Profit and Loss Ac     Dr.   8,000

      To Discount on Issue of Debenture A/c                             8,000

(Being discount on Issue of Debenture written off)

2019 31st Mar

                      Statement of Profit and Loss Ac        Dr. 4,000

         To Discount on Issue of Debenture A/c                             4,000

(Being discount on Issue of Debenture written off)  

Working Note :

Calculation discount amount to be written off even' year

Discount Amount = 10,00,000 x 6%= 60,000