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Accountancy · 2023 · 3 marks
Issue and Redemption of DebenturesIssue of Debentures for Consideration other than Cash3 marksshort answer
CBSE 2023 · Region 2 · Set 3 · Q20
Sinco Ltd. purchased assets of the book value of ₹ 1,98,000 from Dixon Ltd. It was agreed that the purchase consideration be paid by issuing 10%…
Sinco Ltd. purchased assets of the book value of ₹ $\displaystyle 1,98,000$ from Dixon Ltd. It was agreed that the purchase consideration be paid by issuing $\displaystyle 10$% debentures of ₹ $\displaystyle 100$ each. Record the necessary journal entries in the books of Sinco Ltd. assuming that the debentures have been issued : (i) At a discount of $\displaystyle 10$%. (ii) At a premium of $\displaystyle 10$%.
On $\displaystyle 1.4.2021$ Y Ltd. invited applications for issuing $\displaystyle 10,000$, $\displaystyle 9$% debentures of ₹ $\displaystyle 100$ each at a discount of $\displaystyle 6$%. The entire amount was payable with application. Application for $\displaystyle 12,000$, $\displaystyle 9$% debentures were received. $\displaystyle 9$% debentures were allotted on pro-rata basis to all the applicants. Excess money received with applications was refunded. On $\displaystyle 31.3.2022$ the company decided to write off discount on issue of debentures according to the provisions of the Companies Act, 2013. On that date the company had ₹ $\displaystyle 10,000$ in its securities premium reserve account. Pass necessary journal entries for the above transactions in the books of the company.
Marking-scheme solution
(a)
Books of Sinco Ltd.
Journal
L.F Debit Credit
Date Particulars Amount Amount
(₹) (₹)
Assets A/c Dr $\displaystyle 1,98,000$
To Dixon Ltd. $\displaystyle 1,98,000$
(Assets purchased from Dixon Ltd)
(i)
Dixon Ltd. Dr $\displaystyle 1,98,000$
Discount on issue of debentures A/c Dr
$\displaystyle 22,000$
To $\displaystyle 10$% Debentures A/c
$\displaystyle 2,20,000$
(Allotment of $\displaystyle 2,200$ debentures of ₹$\displaystyle 100$ each at =
a discount of $\displaystyle 10$% as purchase consideration)
(ii)
Dixon Ltd. Dr $\displaystyle 1,98,000$
To $\displaystyle 10$% Debentures A/c $\displaystyle 1,80,000$
To Securities Premium A/c/ Securities $\displaystyle 18,000$
Premium Reserve A/c
(Allotment of $\displaystyle 1,800$ debentures of ₹$\displaystyle 100$ each at
a premium of $\displaystyle 10$% as purchase consideration)
Or
Q. (b) On $\displaystyle 1.4.2021$ Y Ltd………………………………… …
Ans. (b)
Books of Y Ltd.
Journal
Date Particulars L.F Debit Credit
Amount Amount
(₹) (₹)
$\displaystyle 2021$ Bank A/c Dr $\displaystyle 11,28,000$
To Debenture Application $\displaystyle 11,28,000$
April $\displaystyle 1$ and Allotment A/c
(Receipt of application money on $\displaystyle 12,000$
debentures)
=
Debenture Application and Allotment A/c Dr $\displaystyle 11,28,000$
April $\displaystyle 1$ Discount on issue of debentures A/c Dr $\displaystyle 60,000$
To $\displaystyle 9$% Debentures A/c $\displaystyle 10,00,000$
To Bank A/c $\displaystyle 1,88,000$
(Debenture Application and Allotment
money transferred to $\displaystyle 9$%Debenture A/c,
Excess application money refunded on
rejected application)
$\displaystyle 2022$ Securities Premium A/c/ Securities
Premium Reserve A/c Dr $\displaystyle 10,000$
March $\displaystyle 31$ Statement of Profit and Loss Dr $\displaystyle 50,000$
To Discount on issue of $\displaystyle 60,000$
debentures A/c
(Discount on issue of debentures written
off)
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CBSE Class 12 Accountancy past-paper question from the 2023 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.