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Accountancy · 2023 · 6 marks
Issue and Redemption of DebenturesIssue of Debentures for Consideration other than Cash6 markslong answer
CBSE 2023 · Region 3 · Set 3 · Q26
(a)On 1st April, $\displaystyle 2022$, Smith Ltd. acquired assets of ₹ $\displaystyle 80,00,000$ from Bharat Ltd. and took over its liabilities of ₹ $\displaystyle 10,00,000$ for a purchase consideration of ₹ $\displaystyle 72,00$,000. ₹ $\displaystyle 10,00,000$ was paid by issuing a bank draft in favour of Bharat Ltd., ₹ $\displaystyle 8,00,000$ by accepting a Bill of Exchange drawn upon them by Bharat Ltd. payable after four months and the balance by issuing $\displaystyle 11$% debentures at a discount of $\displaystyle 10$%. Pass the necessary journal entries for the above transactions in the books of Smith Ltd. (b) On 1st April, $\displaystyle 2021$, Bingo Ltd. issued ₹ $\displaystyle 20,00,000$, $\displaystyle 9$% debentures of ₹ $\displaystyle 100$ each at a premium of $\displaystyle 10$%, redeemable at a premium of $\displaystyle 5$%. Pass the necessary journal entries for issue of debentures in the books of Bingo Ltd.
(a)
On 1st April, $\displaystyle 2022$, Smith Ltd. acquired assets of ₹ $\displaystyle 80,00,000$ from Bharat Ltd. and took over its liabilities of ₹ $\displaystyle 10,00,000$ for a purchase consideration of ₹ $\displaystyle 72,00$,000. ₹ $\displaystyle 10,00,000$ was paid by issuing a bank draft in favour of Bharat Ltd., ₹ $\displaystyle 8,00,000$ by accepting a Bill of Exchange drawn upon them by Bharat Ltd. payable after four months and the balance by issuing $\displaystyle 11$% debentures at a discount of $\displaystyle 10$%. Pass the necessary journal entries for the above transactions in the books of Smith Ltd. (b) On 1st April, $\displaystyle 2021$, Bingo Ltd. issued ₹ $\displaystyle 20,00,000$, $\displaystyle 9$% debentures of ₹ $\displaystyle 100$ each at a premium of $\displaystyle 10$%, redeemable at a premium of $\displaystyle 5$%. Pass the necessary journal entries for issue of debentures in the books of Bingo Ltd.
Marking-scheme solution
Smith Ltd.
JOURNAL
Dr. Amount
Date Particulars LF Cr. Amount
(₹) (₹)
$\displaystyle 2022$ (i)
Apr $\displaystyle 1$ Sundry Assets A/c Dr. $\displaystyle 80,00,000$
Goodwill A/c Dr. $\displaystyle 2,00,000$
To Sundry Liabilities A/c $\displaystyle 10,00,000$
To Bharat Ltd $\displaystyle 72,00,000$
(Assets acquired and liabilities taken over from
Bharat Ltd)
_________________________________
(ii)
Bharat Ltd Dr
$\displaystyle 10,00,000$
To Bank A/c
$\displaystyle 10,00,000$
(Purchase consideration partially settled by issuing a
bank draft)
(iii)
Bharat Ltd Dr
$\displaystyle 8,00,000$
To Bills Payable A/c
$\displaystyle 8,00,000$
(Purchase consideration partially settled by
accepting a bill of exchange)
(iv)
Bharat Ltd Dr
$\displaystyle 54,00,000$
Discount / Loss on Issue of
$\displaystyle 6,00,000$
Debentures A/c Dr
To $\displaystyle 10$% Debentures A/c
$\displaystyle 60,00,000$
(Remaining Purchase consideration settled by
issuing a bank draft, accepting a bill of exchange and
issuing $\displaystyle 11$% debentures at discount)
_________________________________
Alternatively (for ((ii)+(iii)+(iv))
Bharat Ltd Dr $\displaystyle 72,00,000$
Discount / Loss on Issue of
Debentures A/c Dr $\displaystyle 6,00,000$
$\displaystyle 10,00,000$
To Bank A/c
To Bills Payable A/c $\displaystyle 8,00,000$
$\displaystyle 60,00,000$
To $\displaystyle 10$% Debentures A/c
(Purchase consideration settled by issuing a bank
draft, accepting a bill of exchange and issuing $\displaystyle 11$%
debentures at discount)
$\displaystyle 16$
_________________________________
(b) On 1st April, $\displaystyle 2021$, Bingo Ltd. issued…….
Ans.
Books of Bingo Ltd.
JOURNAL
Amount
LF Amount
Date Particulars
₹
₹
$\displaystyle 2021$ (i)
Apr $\displaystyle 1$ Bank A/c Dr. $\displaystyle 22,00,000$
To Debenture Application & $\displaystyle 22,00,000$
Allotment A/c
(Application money received )
__________________________________
(ii)
Debenture Application &
Allotment A/c Dr. $\displaystyle 22,00,000$
Loss on Issue of Debentures A/c Dr. $\displaystyle 1,00,000$
To $\displaystyle 9$% Debentures A/c $\displaystyle 20,00,000$
To Securities Premium A/c /
Securities Premium Reserve A/c $\displaystyle 2,00,000$
To Premium on Redemption of $\displaystyle 1,00,000$
Debentures A/c
(Debentures issued at premium, redeemable at
a premium)
_________________________________
PART B
OPTION $\displaystyle 1$
Analysis of Financial Statements
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CBSE Class 12 Accountancy past-paper question from the 2023board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.