X.Ltd. invites application for the issue of 10,000, 14% debentures of Rs 100 each payable as to Rs 20 on application, Rs 60 on allotment and the balance on call. The company receives applications for 13,500 debentures, out of which applications for 8,000 debentures are allotted in full, 5,000 only 40% and the remaining rejected. The surplus money on partially allotted applications is utilised towards allotment. All the sums due are duly received.
Answers
Given : X.Ltd. invites application for the issue of 10,000, 14% debentures of Rs 100 each payable as to Rs 20 on application, Rs 60 on allotment and the balance on call……...
Concept :
DEBENTURE :
- Debenture is a written acknowledgement of debt taken by the company.
- Debentures can be issued with /without charge on the assets.
- 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.
CALLS :
When the whole amount on shares is not paid on application and allotment, the unpaid amount may be called by directors in one or more installments after allotment. Such installments are known as calls.
For X.Ltd. to record the above the journal entries are in the attachment below :
Hope this answer will help you..
Some more questions of this chapter :
Y.Ltd. issued 2,000, 6% Debentures of Rs 100 each payable as follows Rs 25 on application; Rs 50 on allotment and Rs 25 on First and Final call.
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Alfa Limited invited applications for 4,00,000 of its equity shares of Rs 10 each on the following terms : Payable on application Rs 5 per share Payable on allotment Rs 3 per share Payable on first and final call Rs 2 per share Applications for 5,00,000 shares were received. It was decided : (a) to refuse allotment to the applicants for 20,000 shares; (b) to allot in full to applicants for 80,000 shares; (c) to allot the balance ……..
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