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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
On 1st April, 2024, Solar Power Ltd. issued 10,000, 8% Debentures of ₹100 each at a discount of 5%, redeemable at a premium of 15% at the end of five years. All the debentures were subscribed and allotment was made. The company had a balance of ₹80,000 in Securities Premium Reserve. Prepare the Balance Sheet (extract) as at 31st March, 2025.
(This is a partial extract; totals are not shown, since the pre-existing Securities Premium Reserve balance is not matched by any asset appearing in this extract.)
Solar Power Ltd. Balance Sheet (Extract) as at 31st March, 2025
| Particulars | Note No. | ₹ |
|---|---|---|
| I. Equity and Liabilities | ||
| 1. Shareholders’ Funds — Reserves and Surplus | 3 | (1,20,000) |
| 2. Non-Current Liabilities | ||
| a. Long-Term Borrowings | 1 | 10,00,000 |
| b. Other Long-Term Liabilities | 2 | 1,50,000 |
| II. Assets | ||
| Current Assets — Cash and Cash Equivalents | 4 | 9,50,000 |
NOTES TO ACCOUNTS
| Note No. | Particulars | ₹ |
|---|---|---|
| 1 | Long-Term Borrowings — 10,000, 8% Debentures of ₹100 each | 10,00,000 |
| 2 | Other Long-Term Liabilities — Premium on Redemption of Debentures | 1,50,000 |
| 3 | Reserves and Surplus | |
| Securities Premium Reserve | 80,000 | |
| Less: Loss on Issue of Debentures written off | (80,000) | |
| Statement of Profit and Loss | — | |
| Less: Loss on Issue of Debentures written off | (1,20,000) | |
| Total | (1,20,000) | |
| 4 | Cash and Cash Equivalents — 10,000 debentures × ₹95 each | 9,50,000 |
Working Note: Loss on Issue of Debentures = Discount on issue (10,000 × ₹5 = ₹50,000) + Premium on redemption (10,000 × ₹15 = ₹1,50,000) = ₹2,00,000. Of this, ₹80,000 is written off against the existing Securities Premium Reserve, and the remaining ₹1,20,000 against the Statement of Profit and Loss.
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Vol 2 Chapter 2 Q.55 - Issue of Debentures", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 2 - Issue of Debentures.
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