2. Ans. 1. Ranga Ltd.
Date Particulars L.F. Debit ` Credit `
(i) Bank A/c Dr.
To Debenture Application A/c
(Application money received on 9,500
Debentures @ `25 each)
2,37,500
2,37,500
(ii) Debenture Application A/c Dr.
Debenture Allotment A/c Dr.
Discount on Issue of Debentures A/c Dr.
To 12% Debentures A/c
(Application money on 9,500 Debentures
@ 25 transferred to 12% Debentures A/c;
amount due on allotment @ `40 each and
discount on issue @ `5 each recorded by
credit to Debentures A/c)
2,37,500
3,80,000
47,500
6,65,000
(iii) Bank A/c Dr.
To Debenture Allotment A/c
(Allotment money received on 9,500
Debentures @ `40 each)
3,80,000
3,80,000
(iv) Debenture First Call A/c Dr.
To 12% Debentures Allotment A/c
(Amount due on 9,500 Debentures @ `15
each)
1,42,500
1,42,500
3. Date Particulars L.F. Debit ` Credit `
(v) Bank A/c Dr.
To Debenture First Call A/c
To Debenture Calls-in-Advance A/c
(Receipts of the call money on 9,400
Debentures @ `15 each and calls-in-
advance on 200 Debentures `15 each)
1,44,000
1,41,000
3,000
(vi) Deb. Second and Final Call A/c Dr.
To 12% Debentures A/c
(Final call money due on 9,500
Debentures @ `15 each)
1,42,500
1,42,500
(vii) Bank A/c Dr.
Calls-in-Advance A/c Dr.
To Deb. Second and Final Call A/c
(Final call received on 9,200 Debentures
@ `15 each; calls in advance on 200
debentures adjusted)
1,38,000
3,000
1,41,000
4. Ans. 2. (a) Journal of P Ltd.
Date Particulars L.F. Debit ` Credit `
Bank A/c Dr.
Discount on Issue of Deb. A/c Dr.
To 10% Debentures A/c
(Issue of 5,000 – 10% Debentures of `100
each at a discount of 5%, redeemable at
par)
4,75,000
25,000
5,00,000
5. Balance Sheet of P Ltd. As at…
(Relevant Item only)
Liabilities ` Assets `
Secured Loans
10% Debentures 5,00,00
0
Current Assets
Bank
Miscellaneous Expenditures
Discount on Issue of Debentures
4,75,000
25,000
5,00,00
0
5,00,000
6. (b) Journal of Q Ltd.
Date Particulars ` `
Bank A/c Dr.
Loss on Issue of Debentures A/c Dr.
To 11% Debentures A/c
To Prem. on Redemption of Deb. A/c
(Issue of 5,000 – 11% Debentures of `100
each at par, redeemable at premium of
5%)
5,00,000
25,000
5,00,000
25,000
7. Balance Sheet of Q Ltd.
(Relevant Items Only)
Liabilities ` Assets `
Secured Loans
11% Debentures
Current Liabilities and
Provisions
Premium on Redemption of
Debentures
5,00,000
25,000
Current Assets
Bank
Miscellaneous Expenditure
Loss on issue of Debentures
5,00,000
25,000
5,25,000 5,25,000
8. (c) Journal of R Ltd.
Date Particulars ` `
Bank A/c Dr.
Discount on Issue of Deb. A/c Dr.
Loss on Issue of Deb. A/c Dr.
To 12% Debentures A/c
To Premium on Redem. of Deb. A/c
(Issue of 5,000 – 12% Debentures of `100
each at a discount of 5%)
4,75,000
25,000
25,000
5,00,000
Alternatively, the entry may be:
Bank A/c Dr.
Loss on Issue of Deb. A/c Dr.
To 12% Debentures A/c
To Premium on Redem. Of Deb. A/c
4,75,000
50,000
5,00,000
25,000
9. Balance Sheet of R Ltd. as at …
(Relevant Items only)
Liabilities ` Assets `
Secured Loans
12% Debentures
Current Liabilities and
Provisions
Premium on Redemption of
Debentures
5,00,000
25,000
Current Assets
Bank
Miscellaneous Expenditure
* Discount on Issue of Deb.
* Loss on issue of Deb.
4,75,000
25,000
25,000
5,25,000 5,25,000
* Alternatively
Loss on Issue of Deb. 50,000
10. (d) Journal of S Ltd.
Date Particulars ` `
Bank A/c Dr.
Loss on Issue of Debentures A/c Dr.
To 13% Debentures A/c
To Premium on Redem. of Deb. A/c
To Security Premium A/c
(Issue of 5,000 – 103% Debentures of
`100 each at a premium of 5%
redeemable at a premium of 5%)
5,25,000
25,000
5,00,000
25,000
25,000
11. Balance Sheet of S Ltd. As At…
(Relevant Items Only)
Liabilities ` Assets `
Reserves and Surplus
Securities Premium
Secured Loans
13% Debentures
Current Liabilities and
Provisions
Premium on Redemption of
Debentures
25,000
5,00,000
25,000
Current Assets
Bank
Miscellaneous Expenditures
Loss on issue of Debentures
5,25,000
25,000
5,50,000 5,50,000
12. Ans. 3. (a) Total amount of discount on issue of debentures
60,00,000 × 5/100 = `3,00,000
Amount of discount written off each year would be calculated on the basis of
the ratio of outstanding balances in the Debentures A/c:
Year O/s Amt. Ratio
2006
2007
2008
2009
2010
2011
60,00,000
50,00,000
40,00,000
30,00,000
20,00,000
10,00,000
6
5
4
3
2
1
Amount of discount to be written off:
` `
2006
2007
2008
2009
2010
2011
3,00,000 × 6/21 =
3,00,000 × 5/21 =
3,00,000 × 4/21 =
3,00,000 × 3/21 =
3,00,000 × 2/21 =
3,00,000 × 1/21 =
85,714
71,429
57,143
42,857
28,571
14,286
3,00,000
13. Ans. 3. (b)
1
Year
Ended
2
O/s
Amount
3
Months for Which
Amount Remained
Outstanding
4
Total Amt
(2 × 3)
31 Dec. 2005 1,00,000 9 (1 Apr. to 31 Dec.) 9,00,000
31 Dec. 2006 1,00,000
80,000
3 (1 January to 31 March)
9 (1 Apr. to 31 Dec.)
3,00,000
7,20,000
31 Dec. 2007 80,000
60,000
3 (1 Jan. to 31 March)
9 (1 April to 31 Dec.)
2,40,000
5,40,000
31 Dec. 2008 60,000
40,000
3 (1 Jan. to 31 March)
9 (1 April to 31 Dec.)
1,80,000
3,60,000
31 Dec. 2009 40,000
20,000
3 (1 January to 31 March)
9 (1 Apr. to 31 Dec.)
1,20,000
1,80,000
31 Dec. 2010 20,000 3 (1 Jan. to 31 Mar.) 60,000
14. The amount of discount `10,000, on issue of Debentures will be charged to
profit and loss account in the ratio of effective utilization of funds:
Years 2005 2006 2007 2008 2009 2010
Ratio 9,00,000 10,20,000 7,80,000 5,40,000 3,00,000 60,000
Or Or Or Or Or Or
15 17 13 9 5 1
The amount to be written off in various years would be:
Year Ratio × Discount
`
Annual Amt.
`
2005
2006
2007
2008
2009
2010
15/60 × 10,000
17/60 × 10,000
13/60 × 10,000
9/60 × 10,000
5/60 × 10,000
1/60 × 10,000
2,500
2,833
2,167
1,500
833
167
15. Discount on Issue of Debentures A/c
1 April 2005 ` 31 December 2005 `
Debentures A/c 10,000 Profit and Loss A/c
Balance c/d
2,500
7,500
10,000 10,000
1 January 2006
Balance b/d 7,500
31 December 2006
Profit and Loss A/c
Balance c/d
2,833
4,667
7,500 7,500
1 January 2007
Balance b/d 4,667
31 December 2007
Profit and Loss A/c
Balance c/d
2,167
2,500
4,667 4,667
1 January 2008
Balance b/d 2,500
31 December 2008
Profit and Loss A/c
Balance c/d
1,500
1,000
1 January 2009
Balance b/d
Balance c/d
1,000
1,67
31 December 2009
Profit and Loss A/c 833
1,000 1,000
1 January 2010
Balance b/d 167
31 December 2010
Profit and Loss A/c 167
16. Ans. 4. Anil Ltd.
Calculation of interest for the expired period from January 1 to March at 12%
interest.
40,00,000 × 12 × 13 / 100 × 12
= ` 1,200
Total amount paid including interest
40,000 × 96 / 100 = ` 38,400
Less: Amount paid for interest = ` 1,200
Amount paid exclusively for Debentures = ` 37,200
17. Ans. 5. AB Ltd.
Face value of Debentures = 6,000 × 100 = 6,00,000
Rate of Discount = 5%
Total Discount = 5% of ` 6,00,000
= `30,000
40,00,000 × 12 × 13 / 100 × 12
= ` 1,200
Total amount paid including interest
40,000 × 96 / 100 = ` 38,400
Less: Amount paid for interest = ` 1,200
Amount paid exclusively for Debentures = ` 37,200
24. Discount on issue of Debentures has been written off in proportion to the
outstanding amounts:
` `
End of 2006
End of 2007
End of 2008
End of 2009
End of 2010
End of 2011
50,000
50,000
40,000
30,000
20,000
10,000
5
5
4
3
2
1
5/20 × 1,000 =
5/20 × 1,000 =
4/20 × 1,000 =
3/20 × 1,000 =
2/20 × 1,000 =
1/20 × 1,000 =
250
250
200
150
100
50
1,000
