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Chapter 9 . Company Accounts—Issue of Debentures 9.7
Illustration 6.
Complete the following Journal entries:
Date Particulars L.F. Dr. (`) Cr. (`)
Sundry Assets A/c ...Dr. 30,00,000
To Sundry Liabilities A/c 15,00,000
To RSM Ltd. 13,00,000
To ? ?
(Business of RSM Ltd. purchased)
RSM Ltd. ...Dr. ?
? ...Dr. ?
To ? ?
To ? ?
To ? ?
(?; 10% Debentures of ` 100 each redeemable at 10% premium
issued at 10% discount)
? ...Dr. ?
To ? ?
(Loss on issue of debentures written off)
Solution:
Date Particulars L.F. Dr. (`) Cr. (`)
Sundry Assets A/c ...Dr. 30,00,000
To Sundry Liabilities A/c 15,00,000
To RSM Ltd. 13,00,000
To Capital Reserve A/c (Balancing Figure) 2,00,000
(Business of RSM Ltd. purchased)
RSM Ltd. ...Dr. 13,00,000
Loss on Issue of Debentures A/c ...Dr. 2,88,880
To 10% Debentures A/c 14,44,400
To Premium on Redemption of Debentures A/c 1,44,440
To Bank A/c 40
(14,444; 10% Debentures of ` 100 each redeemable at
10% premium issued at 10% discount)
Statement of Profit and Loss (Finance Cost) Dr. 2,88,880
To Loss on Issue of Debentures A/c 2,88,880
(Loss on issue of debentures written off)
Unsolved Questions
1. Emm Ess Ltd. issued 10,000, 10% Debentures of ` 100 each at a discount of 10% on 1st April, 2019. The
debentures were redeemable after 5 years at a premium of 10%. The amount was payable along with
application. Interest was payable half-yearly. Applications were received for 15,000 debentures. Allotment
was made to applicants for 10,000 Debentures and rest were sent letters of regret. Tax is deducted at source
(TDS) @ 10%.
You are required to:
(i) Pass Journal entries for Issue of Debentures,
(ii) Pass Journal entries for interest on debentures for the year ended 31st March, 2020, and
(iii) Prepare 10% Debentures Account.