Question 24 Chapter 9 of Class 12 Part – 2 – 2024

Question 24 Chapter 9 of Class 12 Part – 2 – 2024

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 Class 12 Part – 2 – 2024: –

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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)

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:-

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 :-

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

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