Question

S. Singh Limited obtained a loan of 5,00,000 from State Bank of India @ 10% p.a. interest. The compan
issued 7,50,000, 10% Debentures of 100 each in favour of State Bank of India as Collateral Secum
the company.
Pass necessary Journal entries for the above transactions:
(i) When company decided not to record the issue of 10% Debentures as Collateral Security.
(ii) When company decided to record the issue of 10% Debentures as Collateral Security
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Answer 1

Answer:

(i) Bank account debit 5,00,000

To Bank Loan account. 5,00,000

(ii) Bank account debit 5,00,000

To Bank Loan account. 5,00,000

Debentures Suspense account debit. 7,50,000

To 10% Debentures account. 7,50,000