(ii) 12% Debentures at premium of 10%, redeemable at par. A company issued ₹80,000, (iii) 12% Debentures at discount of 10%, redeemable at par. A company issued ₹80,000, Q.2. Give journal entries for the following cases when face value of a Debenture is : ₹100 2,000, 12% Debentures at par, redeemable at par. (i) A company issued (ii) 2,000, 12% Debentures at premium of 10%, redeemable at par. A company issued (iii) 2,000, 12% Debentures at discount of 10%, redeemable at par. A company issued CASE 4: When debentures are issued at par and are redeemable at premium. A Debenture is issued at 100 with the condition that it will be redeemed at 10% ₹ premium i.e. at 110 on maturity. ₹ 10 to be paid as Premium at the time of redemption is a known loss at the time ₹ of issue of debenture. As per Convention of Conservatism it should be recorded as loss at the time of issue of debenture by debiting “loss on issue of Debentures A/c”. ENTRIES FOR ISSUE: Bank A/c [₹100*1] 100 Dr 100 To Debenture Application A/c [₹100*1] (Being the application money received) Debenture Application A/c [₹100*1] 100 Dr Loss on issue of Debentures 10 A/c [₹10*1] Dr 100 To Debentures A/c [₹100*1] 10 . To Premium on Redemption of Debentures A/c [₹10*1] (Being application money transferred to Debentures a/c issued at par, redeemable at premium) ENTRIES FOR REDEMPTION Debentures A/c [Face value ] 100 ₹100*1 Dr 10 Premium on Redemption of Debentures A/c [₹10*1] 110 To Debentureholders A/c [₹110*1] Debentureholders A/c [₹110(F.V. of debenture 110 +premium)*1] Dr 110 To Bank A/c [₹100*1] (Being amount of debenture along with premium paid to debentureholders)
(ii) A company issued ₹80,000, 12% Debentures at premium of 10%, redeemable at par. (iii) A company issued ₹80,000, 12% Debentures at discount of 10%, redeemable at par. Q.2. Give journal entries for the following cases when face value of a Debenture is ₹100 : (i) A company issued 2,000, 12% Debentures at par, redeemable at par. (ii) A company issued 2,000, 12% Debentures at premium of 10%, redeemable at par. (iii) A company issued 2,000, 12% Debentures at discount of 10%, redeemable at par. CASE 4: When debentures are issued at par and are redeemable at premium. A Debenture is issued at ₹ 100 with the condition that it will be redeemed at 10% premium i.e. at ₹ 110 on maturity. ₹ 10 to be paid as Premium at the time of redemption is a known loss at the time of issue of debenture. As per Convention of Conservatism it should be recorded as loss at the time of issue of debenture by debiting “loss on issue of Debentures A/c”. ENTRIES FOR ISSUE: Bank A/c [₹100*1] Dr To Debenture Application A/c [₹100*1] (Being the application money received) 100 100 Debenture Application A/c [₹100*1] Dr Loss on issue of Debentures A/c [₹10*1] Dr To Debentures A/c [₹100*1] . To Premium on Redemption of Debentures A/c [₹10*1] (Being application money transferred to Debentures a/c issued at par, redeemable at premium) 100 10 100 10 ENTRIES FOR REDEMPTION Debentures A/c [Face value ₹100*1 ] Dr Premium on Redemption of Debentures A/c [₹10*1] To Debentureholders A/c [₹110*1] 100 10 110 Debentureholders A/c [₹110(F.V. of debenture +premium)*1] Dr To Bank A/c [₹100*1] (Being amount of debenture along with premium paid to debentureholders) 110 110
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