T.S. Grewal Class 12 Vol 2 Chapter 2 Q.12 - Issue of Debentures

Question 12

Linux Ltd. issued 12,000; 8% Debentures of ₹100 each at a discount of 5%, payable 25% on application, 20% on allotment, and the balance after three months. Pass Journal entries.

Solution

Face Value of Debenture = ₹100. Discount (₹100 × 5%) = ₹5. Issue Price = ₹95.

On Application (25%) = ₹25 per debenture. On Allotment (20%) = ₹20 (25 − 5) per debenture. On First and Final Call (50%) = ₹50 per debenture.

JOURNAL

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Bank A/c    Dr.		3,00,000
	To 8% Debenture Application A/c			3,00,000
	(Application money received for 12,000; 8% debentures at ₹25 each)
	8% Debenture Application A/c    Dr.		3,00,000
	To 8% Debentures A/c			3,00,000
	(Debenture application money transferred to 8% Debentures Account)
	8% Debenture Allotment A/c    Dr.		2,40,000
	Discount on Issue of Debentures A/c    Dr.		60,000
	To 8% Debentures A/c			3,00,000
	(Allotment money due on 12,000; 8% debentures at ₹20 each, at a discount of ₹5)
	Bank A/c    Dr.		2,40,000
	To 8% Debenture Allotment A/c			2,40,000
	(Allotment money received)
	8% Debenture First and Final Call A/c    Dr.		6,00,000
	To 8% Debentures A/c			6,00,000
	(First and final call money due on 12,000; 8% debentures at ₹50 each)
	Bank A/c    Dr.		6,00,000
	To 8% Debenture First and Final Call A/c			6,00,000
	(First and final call money received)