On 1st April 2018, Pearless Ltd issued Rs 50,00,000 8% Debentures of Rs 100 each at a Discount - Accountancy - Accounting for Not-for-Profit Organisation

Question

On 1st April 2018, Pearless Ltd issued Rs 50,00,000 8% Debentures
of Rs 100 each at a Discount
of 5% redeemable at a premium of 10% Security Premium Reserve A/c
had a balance of Rs
4,00,000 and Capital Reserve had a balance of Rs 1,50,000
(i) Pass Journal Entries for Issue of Debentures
(ii) Journal Entry for Writing off of Loss on Issue on Debentures
Also Prepare Loss on Issue
of Debentures A/c
(iii) Calculate Interest on Debentures for half year end 31st March
2019

Rachna Puneet Mehta · Accepted Answer

Solution
Journal

Date
Particular
L F
Dr (Rs)
Cr (Rs)

Bank A/c Dr

4750000

To Debenture Application A/c
(Being the debenture application money received)

4750000

Debentures Application A/c Dr

4750000

Loss on issue of Debentures A/c Dr

750000

To 8% debentures A/c

5000000

To premium on redemption on debentures A/c
(Being the issue of 5,000; 8% debentures of rs 100 each at a
discount of 5% and repayable at a premium of 10%)

500000

(iii) interest on debentures = 50,00,000 × (6/12) ×
(8/100)
= 20,000
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Date	Particular	L.F	Dr.(Rs)	Cr.(Rs)
	Bank A/c. Dr.		4750000
	To Debenture Application A/c (Being the debenture application money received)			4750000
	Debentures Application A/c. Dr.		4750000
	Loss on issue of Debentures A/c. Dr		750000
	To 8% debentures A/c			5000000
	To premium on redemption on debentures A/c (Being the issue of 5,000; 8% debentures of rs 100 each at a discount of 5% and repayable at a premium of 10%)			500000