Question

X limited issued 20,000 9% debentures of Rs.100 each at a discount of 4% on 01.04.2020 payable

Rs.30 on application and balance on allotment. The debentures are redeemable after 5 years, pass

journal entries for the issue of debentures and writing off discount of debentures.​

Answer 1

Bank a/c - - - - - Dr.5,76,000

• To 9%debenture a/c - - - 5,76,000.

(being the debenture application money received on the debentures of 20,000 on discount)

9% debenture application a/c - - - Dr. 5,76,000

Discount on debentures account - - - Dr. 24,000

• To debenture holders a/c - - - 6,00,000.

(being the debentures application money adjusted towards discount).

W.N

Calculation of discount

20,000× 30 = 6,00,000

6,00,000 × 4/100 = 24,000

6,00,000 - 24,000 = 576000.

Debenture allotment a/c - - - Dr. 14,00,000

• To 9%debenture account - - 14,00,000

(being allotment money due)

Bank account - - - Dr. 14,00,000

• To debentureholders account - - - 14,00,000

(being allotment money received on 9%debentures).

Capital reserve account - - - Dr. 24,000

• To Discount on issue of debenture - - 24,000

(being discount on issue of debentures written off).

Thanks.