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Question 24 Chapter 9 of +2-Part-1 – USHA Publication 12 Class Part – 1

Question 24 Chapter 9 of +2-Part-1 - USHA Publication 12 Class Part - 1
Question 24 Chapter 9 of +2-Part-1 - USHA Publication 12 Class Part - 1

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Question 24 Chapter 9 of +2-Part-1

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24. (Issue of Debentures for consideration other than Cash/Balance Sheet) A limited company created RS. 1,00,000 debenture stock, which was issued as follows:
(a) to sundry persons for cash at 90 % Rs. 50,000 nominal.
(b) to a creditor Rs. for 20,000 capital expenditure in satisfaction of his claim 23,000 nominal.
(c) to bankers as collateral security Rs. 27,000 nominal.
The issues (a) and (b) are redeemable at the end of 5 years, at par. How the debenture stock be dealt with while preparing the balance sheet of the company?

The solution of Question 24 Chapter 9 of +2 Part-1: –

a) Rs. 50,000 debentures issued for cash to sundry persons will appear on the liabilities side of the balance sheet under the heading “Secured loans “ . Discount on issue of debentures Rs. 5,000 (10 % 50,000) will appear on assets side under the heading “ Miscellaneous Expenditures “ (not written off)

Balance Sheet Schedule –III (part I)
 Particulars
Note no.Current Year ₹Previous Year ₹
I1. Equity & Liability   
 Share Capital   
 Reserve & Surplus   
 Discount on Debentures (5,000) 
 2. Non Current Liabilities   
 Secured Loans   
 Debentures 50,000 
 Total 45,000 
IIAssets   
 1. Non Current Assets
   
 2. Current Assets   
 Cash & Cash equivalent   
 Cash at Bank 45,000 
 Total 45,000 

b) Debentures issued nominal Rs. 23,000 shall be shown under “Secured loans“ . Capital expenditure of Rs. 20,000 shall be shown under “Fixed Assets“ . Difference of Rs. 3,000 shall be added to discount on issue of debentures A/c. combined effect of (a) & (b) will be shown in the balance sheet as follows:-

Balance Sheet Schedule –III (part I)
 Particulars
Note no.Current Year ₹Previous Year ₹
I1. Equity & Liability   
 Share Capital   
 Reserve & Surplus   
 Discount on Debentures (8,000) 
 2. Non Current Liabilities   
 Secured Loans   
 Debentures 73,000 
 Total 65,000 
IIAssets   
 1. Non Current Assets
   
 Fixed Assets 20,000 
 2. Current Assets   
 Cash & Cash equivalent   
 Cash at Bank 45,000 
 Total 65,000 

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c) Debentures issued Rs. 25,000 against a bank loan of Rs. 25,000 as collateral Secruity are usually shown in balance sheet by the way of note. Combined effect of (a) ,(b) & (c) is shown below :-

Balance Sheet Schedule –III (part I)
 Particulars
Note no.Current Year ₹Previous Year ₹
I1. Equity & Liability   
 Share Capital   
 Reserve & Surplus   
 Discount on Debentures1(8,000) 
 2. Non Current Liabilities   
 Secured Loans   
 Bank Loans (Secured against debentures of Rs. 27,000 as collateral Secruity) 27,000 
 Debentures (In addition debentures of Rs. 27,000 given as collateral Secruity)  73,000 
 Total 92,000 
IIAssets   
 1. Non Current Assets
   
 Fixed Assets 20,000 
 2. Current Assets   
 Cash & Cash equivalent   
 Cash at Bank 72,000 
 Total 92,000 

Note : Debentures discount Rs. 8,000 to be written off in 5 years @ Rs. 1,600 per year.

It all about Question 24 Chapter 9 of +2-Part-1, If you have any problem please comment below.

Issue of Debentures from the point of view of Redemption

You can also Check out the solved question of other Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

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