Question

A. Ltd. issued 90,00,000, 9% Debenture of Rs 50 each at a discount of 8%, redeemable at par any time after 9 years. Record necessary entries in the books of A. Ltd.

Answer 1

Answer:

A. Ltd. today will receive cash of Rs. 3,726,000

Explanation:

A. Ltd ability to issue  900,000 debenture, from which they issue 9 % of 900,000. It means they sell 81,000 debenture @ Rs. 50 at discount of 8 % also right. The actual price of debenture will be Rs.46.  So they will cash amount Rs.3,726,000.

Answer 2

A. LTD will received total amount in cash is 37,26,000                    Explanation:

A. LTD. issue 9,000,00  9%  debenture of Rs 50 each on 8% discount. it means A LTD. sell 81000 debenture @ 50 at a discount of 8% . so A LTD. will receive cash amount $(81000\times 46)$ = 37,26,000.

                                             journal entries

                 cash a/c                           DR                                  37,26,000

                 discount on issue of debenture a/c  DR              3,24,000

                                             TO 9% debenture a/c                              40,50,000

( being the 9% debenture issued  of Rs 50each at a 8% discount)