Page 50 - DEBK12

Chapter 9 . Company Accounts—Issue of Debentures 9.9

The applications were received for 12,500 debentures and allotment was made on pro rata basis to all the
applicants. Both the allotments were made on 1st April, 2019.
You are required to:
(i) Pass Journal entries for issue of debentures;
(ii) Pass Journal entries for interest for the year ended 31st March, 2020 and

(iii) Prepare Balance Sheet showing the above transactions.
Note: According to the terms of issue, interest is payable on half-yearly basis.
[Ans.: Total of Balance Sheet—` 34,08,880.]
9. Apollo Ltd. issued 50,000, 9% Debentures of ` 100 each at a premium of ` 20 per debenture payable
` 70 (including securities premium), ` 20 on allotment and balance on first and final call. The allotment was
made and call was made subsequently.
Applications were received for 1,00,000 debentures. The company allotted debentures on pro rata basis to
all the applicants. The Articles of Association permitted the company to retain excess application money to
be appropriated towards allotment money and calls. The Articles of Association did not permit the company
to pay interest on Calls-in-Advance. The company made the allotment and refunded excess application
money beyond allotment money to the applicants.
You are required to pass necessary Journal entries and determine the value followed by the company.
[Hint: The company followed the value of being just and fair by refunding the excess money
to the shareholders as the Articles of Association did not allow payment of interest on Calls-in-
Advance.]