Question

A. Ltd. Company issued Rs,5,00,000 Debentures at a discount of 5% repayable at par by annual drawings of Rs.1,00,000. Make the necessary ledger accounts in the books of the company for the first year.

Answer 1

Given: A. Ltd. Company issued Rs,5,00,000 Debentures at a discount of 5% repayable at par by annual drawings of Rs.1,00,000.  

 

 

Concept :  

DEBENTURE :  

• Debenture is a written acknowledgement of debt taken by the company.
• Debentures can be issued with /without charge on the assets.
• Debentures may be issued at par, at premium or at discount.  
• When a debenture is issued at a price below its nominal value, it is said to be issued at a discount
• Journal entries on issue of debenture are also the same as in case of issue of shares.  The difference is that instead of 'Share capital A/c , a debenture A/c'  is opened in the books of accounts and the rate of interest on debenture is prefixed on the issue of debentures.
• Debentures can be converted into equity shares.
• The debentures can be redeemed in lump sum or in installments.
• Debentures are shown under the head Non current liabilities and subhead long term borrowings.  

For the above the ledger accounts in the books of the company for the first year are in the attachment below :  

Hope this answer will help you..

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A. Ltd. issued 4,000, 9% Debentures of Rs 100 each on the following terms Rs 20 on Application; Rs 20 on Allotment; Rs 30 on First call; and Rs 30 on Final call. The public applied for 4,800 Debentures. Applications for 3,600 Debentures were accepted in full. Applications for 800 Debentures were allotted 400 Debentures and applications for 400 Debentures were rejected.

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