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NCERT · Class 12 · Accountancy

Unit 2: Issue and Redemption of Debentures

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Numerical Questions for NCERT Accountancy Solutions Part 2 Class 12 Chapter 2

20 questions
Q1Written answer

G.Ltd. issued 75, 00,000, 6% Debenture of ₹ 50 each at par payable ₹ 15 on application and ₹ 35 on allotment, redeemable at par after 7 years from the date of issue of debenture. Record necessary entries in the books of Company.

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Worked solution

The solution to this question is as follows:

Book of G. Ltd.

 

Journal

 
Date Particulars L.F. Debit

Amount

₹

 Credit

Amount

₹
Bank A/c Dr. 11,25,00,000
To 6% Debenture Application A/c 11,25,00,000
(Application money @ ₹ 15 each received for 75,00,000 debentures)
6% Debenture Application A/c Dr. 11,25,00,000
To 6% Debenture A/c 11,25,00,000
(Application money of 75,00,000 debentures transferred to 6% Debentures Account)
6% Debenture Allotment A/c Dr. 26,25,00,000
To 6% Debenture A/c 26,25,00,000
(Allotment money @ ₹ 35 each due for 75,00,000 debentures )
Bank A/c Dr. 26,25,00,000
To 6% Debenture Allotment A/c 26,25,00,000
(Allotment money received @ ₹ 35 each on 75,00,000 debentures)
Q2Written answer

Y.Ltd. issued 2,000, 6% Debentures of ₹ 100 each payable as follows: ₹ 25 on application; ₹ 50 on allotment and ₹ 25 on First and Final call.

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Worked solution

The solution to this question is as follows:

Books of Y Ltd.

 

Journal

 
Date Particulars L.F. Debit

Amount

₹

 Credit

Amount

₹
Bank A/c Dr. 50,000
To 6% Debentures Application A/c 50,000
(Application money  @ ₹ 25 each received for 2,000

6% Debentures)
6% Debenture Application A/c Dr. 50,000
To 6% Debenture A/c 50,000
(Application money on 2,000 debentures  transferred to

6% Debentures Account)
6% Debenture Allotment A/c Dr. 1,00,000
To 6% Debenture A/c 1,00,000
(Debenture Allotment money @ ₹ 50 each due on 2,000

6% Debentures)
Bank A/c Dr. 1,00,000
To 6% Debenture Allotment A/c 1,00,000
(Allotment money for 2,000 6% Debentures received)
6% Debenture First and Final Call A/c Dr. 50,000
To 6% Debenture A/c 50,000
(Debenture First and Final Call @ 25 each due on 2,000

6% Debentures)
Bank A/c Dr. 50,000
To 6% Debenture First and Final Call A/c 50,000
(First and Final Call for 2,000 6% Debentures received)
Q3Written answer

A Ltd. issued 10,000, 10% Debentures of ₹ 100 each at a premium of 5% payable as follows:

₹ 10 on Application;

₹ 20 along with premium on allotment and balance on First and Final call. Record necessary Journal Entries.

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Worked solution

The solution to this question is as follows:

Books of A. Ltd.

 

Journal

 
Date Particulars L.F. Debit

Amount

₹

 Credit

Amount

₹
Bank A/c Dr. 1,00,000
To 10% Debentures Application A/c 1,00,000
(Application money received for 10,000, 10% Debenture Application @ ₹ 10 each)
10% Debentures Application A/c Dr. 1,00,000
To 10% Debenture A/c 1,00,000
(Application money @ ₹ 10 each transferred to

10% Debenture Account)
10% Debenture Allotment A/c Dr. 2,50,000
To 10% Debentures A/c 2,00,000
To Securities Premium A/c 50,000
(Allotment due @ ₹ 25 each including premium ₹ 5 on

10,000, 10% Debentures)
Bank A/c Dr. 2,50,000
To 10% Debenture Allotment A/c 2,50,000
(Allotment money received on allotment @ ₹ 25 each for

10,000 10% Debentures)
10% Debenture First and Final Call A/c Dr. 7,00,000
To 10% Debenture A/c 7,00,000
(First and Final Call @ ₹ 70 each on 10,000

10% Debentures due)
Bank A/c Dr. 7,00,000
To 10% Debenture First and Final Call A/c 7,00,000
(Debenture First and Final Call received @ ₹ 70 each for

10,000 10% Debentures)
Q4Written answer

A. Ltd. issued 90,00,000, 9% Debenture of ₹ 50 each at a discount of 8%, redeemable at par any time after 9 years. Record necessary entries in the books of A. Ltd.

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Worked solution

The solution to this question is as follows

Books of A. Ltd.

 

Journal

 
Date Particulars L.F. Debit

Amount

₹

 Credit

Amount

₹
Bank A/c Dr. 41,40,00,000
Discount on Issue of Debenture A/c Dr. 3,60,00,000
To 9% Debenture A/c 45,00,00,000
(Money received for 90,00,000 9% Debentures

@ ₹ 50 each at discount of 8%)
Alternative Method:

 
Bank A/c Dr. 41,40,00,000
To 9% Debentures Application A/c 41,40,00,000
(Debenture Application money received  @ ₹ 46 each

on 90,00,000  9% Debentures)
9% Debentures Application A/c Dr. 41,40,00,000
Discount on issue of Debentures A/c Dr. 3,60,00,000
To 9% Debenture A/c 4,50,00,000
(9% Debentures application money transferred to

9% Debenture Account)
Q5Written answer

A. Ltd. issued 4,000, 9% Debentures of ₹ 100 each on the following terms:

₹ 20 on Application;

₹ 20 on Allotment;

₹ 30 on First call; and

₹ 30 on Final call.

The public applied for 4,800 Debentures. Applications for 3,600 Debentures were accepted in full. Applications for 800 Debentures were allotted 400 Debentures and applications for 400 Debentures were rejected.

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Worked solution

The solution to this question is as follows:

 

Books of A Ltd.

 
Date Particulars L.F. Debit

Amount

₹

 Credit

Amount

₹
Bank A/c Dr. 96,000
To 9% Debenture Application A/c 96,000
(9% Debenture Application money received on 4,800 Debentures

@ 20 each)
9% Debenture Application A/c Dr. 96,000
To 9% Debenture A/c 80,000
To 9% Debenture Allotment A/c 8,000
To Bank A/c 8,000
(9% Debenture Application money of 4000 debentures transferred to

Debentures Account, 400 debentures rejected returned and

remaining amount adjusted on allotment)
9% Debenture Allotment A/c Dr. 80,000
To 9% Debenture A/c 80,000
(9% Debenture Allotment due on  4,000 Debentures @ ₹ 20 each)
Bank A/c Dr. 72,000
To 9% Debenture Allotment A/c 72,000
(9% Debenture Allotment money received)
9% Debenture First Call A/c Dr. 1,20,000
To 9% Debenture A/c 1,20,000
(9% Debenture First Call due on 4000 debentures @ ₹ 30 each)
Bank A/c Dr. 1,20,000
To Debenture First Call A/c 1,20,000
(9% Debenture first call received for 4000 debentures

@ ₹ 30 each)
9% Debenture Final Call A/c Dr. 1,20,000
To 9% Debenture A/c 1,20,000
(9% Debenture Final Call due on 4000 debentures

@ ₹ 30 each )
Bank A/c Dr. 1,20,000
To 9% Debenture Final Call A/c 1,20,000
(9% Debenture Final Call received on 4000 debentures

@ ₹ 30 each)
Q6Written answer

T. Ltd. offered 2,00,000, 8% debenture of ₹ 500 each on June 30, 2014 at a premium of 10% payable as ₹ 200 on application (including premium) and balance on allotment, redeemable at par after 8 years. But application are received for 3, 00,000 debentures and the allotment is made on pro-rata basis. All the money due on application and allotment is received. Record necessary entries regarding issue of debentures.

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Worked solution

The solution to this question is as follows:

Books of T. Ltd.

Journal
Date Particulars L.F. Debit

Amount

(₹)

 Credit

Amount

(₹)
2014
Jun. 30 Bank A/c Dr. 6,00,00,000
To 8% Debenture Application A/c 6,00,00,000
(8% Debenture application money received for 3,00,000

debentures @ ₹200 each)
Jun.30 8% Debenture Application A/c Dr. 6,00,00,000
To 8% Debenture A/c 3,00,00,000
To 8% Debenture Allotment A/c 2,00,00,000
To Securities Premium A/c 1,00,00,000
(8% Debenture Application money of 2,00,000 debentures @

₹200 each including ₹50 premium transferred to Debenture Account and rest of the amount adjusted on allotment)
8% Debenture Allotment A/c Dr. 7,00,00,000
To 8% Debenture A/c 7,00,00,000
(8% Debenture allotment on 2,00,000 debentures @

₹350 due)
Bank A/c Dr. 5,00,00,000
To 8% Debenture Allotment A/c 5,00,00,000
(8% Debenture Allotment money received)
Q7Written answer

X.Ltd. invites application for the issue of 10,000, 14% debentures of ₹ 100 each payable as to ₹ 20 on application, ₹ 60 on allotment and the balance on call. The company receives applications for 13,500 debentures, out of which applications for 8,000 debentures are allotted in full, 5,000 only 40% and the remaining rejected. The surplus money on partially allotted applications is utilised towards allotment. All the sums due are duly received.

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Worked solution

The solution to this question is as follows:

Books of X. Ltd.

 

Journal

 
Date Particulars L.F. Debit

Amount

₹

 Credit

Amount

₹
Bank A/c Dr. 2,70,000
To 14% Debenture Application A/c 2,70,000
(14% Debenture application money for 13,500 debentures

@ 20 each received)
14% Debenture Application A/c Dr. 2,70,000
To 14% Debenture A/c 2,00,000
To 14% Debenture Allotment A/c 60,000
To Bank 10,000
(14% Debenture Application money of 10,000 @ ₹ 20 each

transferred to 14% Debentures Account and 500 debentures

were rejected and returned and rest of the amount adjusted

on allotment)
14% Debenture Allotment A/c Dr. 6,00,000
To 14% Debenture A/c 6,00,000
(14% Debenture Allotment money due on 10,000 debentures @

₹ 60 each)
Bank A/c Dr. 5,40,000
To 14% Debenture Allotment A/c 5,40,000
(14% Debenture Allotment money received)
14% Debenture First and Final Call A/c Dr. 2,00,000
To 14% Debenture A/c 2,00,000
(14% Debenture First and Final Call money due on 10,000

debentures @ 20 each)
Bank A/c Dr. 2,00,000
To 14% Debenture First and Final Call A/c 2,00,000
(14% Debenture First and Final Call money received on 10,000

debentures @ ₹ 20 each)
Q8Written answer

R.Ltd. offered 20, 00,000, and 10% Debenture of ₹ 200 each at a discount of 7% redeemable at premium of 8% after 9 years. Record necessary entries in the books of R. Ltd.

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Worked solution

The solution to this question is as follows:

Books of R.Ltd.

 

Journal

 
Date Particulars L.F. Debit

Amount

₹

 Credit

Amount

₹
Bank A/c Dr. 37,20,00,000
To 10% Debenture Application & Allotment A/c 37,20,00,000
(Debenture Application and Allotment money received

for 20,00,000 10% Debentures @ ₹ 200 each)
10% Debenture Application and Allotment A/c Dr. 37,20,00,000
Loss on Issue of Debenture A/c Dr. 3,20,00,000
Discount on Issue of Debentures A/c Dr. 2,80,00,000
To 10% Debenture A/c 40,00,00,000
To Premium on Redemption of Debentures A/c 3,20,00,000
(Allotment of 20,00,000 debenture @ ₹ 200 each at 7%

discount with the term of  8% premium on redemption)
Q9Written answer

M.Ltd. took over assets of ₹ 9, 00, 00,000 and liabilities of ₹ 70, 00,000 of S.Ltd. and issued 8%Debenture of ₹ 100 each. Record necessary entries in the books of M. Ltd.

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Worked solution

The solution to this question is as follows:

Books of M. Ltd.

 

Journal

 
Date Particulars L.F. Debit

Amount

₹

 Credit

Amount

₹
Sundry Assets Dr. 9,00,00,000
To Sundry Liabilities A/c 70,00,000
To S.Ltd. 8,30,00,000
(Assets and liabilities of S. Ltd. taken over)
S. Ltd. Dr. 8,30,00,000
To 8% Debenture A/c 8,30,00,000
(8,30,000 8% debentures @ 100 each issued to S Ltd. in

consideration of assets and liabilities)
Q10Written answer

B.Ltd. purchased assets of the book value of ₹ 4, 00,000 and took over the liability of ₹ 50,000 from Mohan Bros. It was agreed that the purchase consideration, settled at ₹, 3, 80,000, be paid by issuing debentures of ₹ 100 each.

What Journal entries will be made in the following three cases, if debentures are issued: (a) at par; (b) at discount; (c) at premium of 10%? It was agreed that any fraction of debentures be paid in cash.

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Worked solution

The solution to this question is as follows:

 

Case (a)

Book of B. Ltd.

 

Journal

 
Date Particulars L.F. Debit

Amount

₹

 Credit

Amount

₹
Sundry Assets A/c Dr. 4,00,000
Goodwill A/c Dr. 30,000
To Sundry Liabilities A/c 50,000
To Mohan Bros. 3,80,000
(Assets and liabilities of Mohan Bros. taken over)
Mohan Bros. Dr. 3,80,000
To Debenture A/c 3,80,000
(3,800 debentures of 100 each issued to Mohan Bros. in

consideration of assets and liabilities)

 

Case (b)

Sundry Assets A/c Dr. 4,00,000
Goodwill A/c Dr. 30,000
To Sundry Liabilities A/c 50,000
To Mohan Bros. 3,80,000
(Assets and liabilities of Mohan Bros. taken over)
Mohan Bros. Dr. 3,80,000
Discount on Issue of Debenture A/c Dr. 42,222
To Debenture A/c 4,22,200
To Bank A/c 22
(Issued 4,222 debentures of ₹ 100 each at 10% discount

and balance paid in cash)

Case (c)

 
  Sundry Assets A/c Dr. 4,00,000
Goodwill A/c Dr. 30,000
To Sundry Liabilities A/c 50,000
To Mohan Bros. 3,80,000
(Assets and liabilities of Mohan Bros. taken over)
Mohan Bros Dr. 3,80,000
To Debentures A/c 3,45,400
To Securities Premium A/c 34,540
To Bank A/c 60
(Issued of 3,454 debentures at 10% premium and balance

paid in cash)