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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 2 · Q26
(a)On 1st April, $\displaystyle 2021$, LM Ltd. issued ₹ $\displaystyle 45,00,000$, $\displaystyle 12$% Debentures of ₹ $\displaystyle 50$ each at a discount of $\displaystyle 10$%. On 31st March, $\displaystyle 2022$ it decided to write off discount on issue of debentures according to the provisions of the Companies Act, 2013. It had a credit balance of ₹ $\displaystyle 1$,'$\displaystyle 75,000$ in its 'Securities Premium Reserve Account'. Pass necessary journal entries for the above transaction in the books of the company. (b) On 1st April, $\displaystyle 2022$, KR Ltd. acquired assets of ₹ $\displaystyle 50,00,000$ from SM Ltd. and took over liabilities of ₹ $\displaystyle 10,00,000$ for a purchase consideration of ₹ $\displaystyle 40,00$,000. ₹ $\displaystyle 20,00,000$ were paid to SM Ltd. by issuing $\displaystyle 12$% Debentures of ₹ $\displaystyle 100$ each at a premium of $\displaystyle 25$%, ₹ $\displaystyle 15,00,000$ were paid by issuing a crossed cheque in favour of SM Ltd. For the balance, KR Ltd. accepted a Bill of Exchange drawn upon them by SM Ltd. payable after three months. Pass necessary journal entries for the above transactions in the books of the company.
(a)
On 1st April, $\displaystyle 2021$, LM Ltd. issued ₹ $\displaystyle 45,00,000$, $\displaystyle 12$% Debentures of ₹ $\displaystyle 50$ each at a discount of $\displaystyle 10$%. On 31st March, $\displaystyle 2022$ it decided to write off discount on issue of debentures according to the provisions of the Companies Act, 2013. It had a credit balance of ₹ $\displaystyle 1$,'$\displaystyle 75,000$ in its 'Securities Premium Reserve Account'. Pass necessary journal entries for the above transaction in the books of the company. (b) On 1st April, $\displaystyle 2022$, KR Ltd. acquired assets of ₹ $\displaystyle 50,00,000$ from SM Ltd. and took over liabilities of ₹ $\displaystyle 10,00,000$ for a purchase consideration of ₹ $\displaystyle 40,00$,000. ₹ $\displaystyle 20,00,000$ were paid to SM Ltd. by issuing $\displaystyle 12$% Debentures of ₹ $\displaystyle 100$ each at a premium of $\displaystyle 25$%, ₹ $\displaystyle 15,00,000$ were paid by issuing a crossed cheque in favour of SM Ltd. For the balance, KR Ltd. accepted a Bill of Exchange drawn upon them by SM Ltd. payable after three months. Pass necessary journal entries for the above transactions in the books of the company.
Marking-scheme solution
Books of LM Ltd.
JOURNAL
Amount
LF Amount
Date Particulars
₹
₹
$\displaystyle 2021$ (i)
Apr $\displaystyle 1$ Bank A/c Dr. $\displaystyle 40,50,000$
To Debenture Application & $\displaystyle 40,50,000$
Allotment A/c
(Application money received on $\displaystyle 90,000$)
__________________________________
(ii)
Debenture Application &
Allotment A/c Dr.
$\displaystyle 40,50,000$
Discount / Loss on issue of
Debentures A/c Dr.
$\displaystyle 4,50,000$
To $\displaystyle 9$% Debentures A/c
$\displaystyle 45,00,000$
(debentures issued at $\displaystyle 10$% discount)
__________________________________
(iii)
$\displaystyle 2022$
Statement of Profit & Loss Dr.
Mar $\displaystyle 2,75000$
$\displaystyle 31$ Securities Premium / Securities
Premium Reserve A/c Dr.
$\displaystyle 1,75,000$
To Discount / Loss on Issue of
Debentures A/c
$\displaystyle 4,50,000$
(Discount / loss on issue of debentures
written off)
__________________________________
(b)On 1st April, $\displaystyle 2022$, KR Ltd. acquired…..
Ans
Books of KR Ltd.
JOURNAL
LF Dr. Cr.
Date Particulars
Amount ₹ Amount ₹
$\displaystyle 2022$ (i)
Apr $\displaystyle 1$ Sundry Assets A/c Dr. $\displaystyle 50,00,000$
To Sundry Liabilities A/c $\displaystyle 10,00,000$
To SM Ltd $\displaystyle 40,00,000$
(Assets acquired and liabilities taken
over from SM Ltd)
_________________________________
$\displaystyle 16$
(ii)
SM Ltd Dr
To Bank A/c $\displaystyle 15,00,000$
(Purchase consideration partially settled $\displaystyle 15,00,000$
by issuing a crossed cheque)
_________________________________
(iii)
SM Ltd Dr
To Bills Payable A/c
$\displaystyle 5,00,000$
(Purchase consideration partially settled
$\displaystyle 5,00,000$
by accepting a bill of exchange)
(iv)
SM Ltd Dr
To $\displaystyle 10$% Debentures A/c
$\displaystyle 20,00,000$
To Securities Premium A/c /
$\displaystyle 16,00,000$
Securities Premium Reserve A/c
$\displaystyle 4,00,000$
(Remaining Purchase consideration
settled by issuing $\displaystyle 16,000$ $\displaystyle 12$% debentures
at premium)
Alternatively (for (ii)+(iii)+(iv))
SM Ltd Dr
$\displaystyle 40,00,000$
To Bank A/c
$\displaystyle 15,00,000$
To Bills Payable A/c
$\displaystyle 5,00,000$
To $\displaystyle 10$% Debentures A/c
$\displaystyle 16,00,000$
To Securities Premium A/c /
$\displaystyle 4,00,000$
Securities Premium Reserve A/c
(Purchase consideration settled by
issuing a crossed cheque, accepting a bill
of exchange and issuing $\displaystyle 16,000$ $\displaystyle 12$%
debentures at premium)
_________________________________
PART B
OPTION - I
(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.