Company Account – Issue and Redemption of Debentures
1 Give the meaning of ‘Debentures issued as Collateral Security’.
2 X Ltd. issued 5,000; 10% Debentures of Rs 100 each payable Rs 40 on application and Rs 60 on allotment. Company received applications for 8,000 Debentures. It rejected applications for 2,000 debentures and allotment was made on pro rata basis among the remaining applicants. Pass the necessary journal entries.
3 Venus Ltd. is a real estate company. To discharge its Corporate Social Responsibility, it decided to construct a night shelter for homeless. The company took over assets of Rs 10,00,000 and liabilities of Rs 1,80,000 of Cayns Ltd. for Rs 7,60,000. Venus Ltd. issued 9% Debentures of Rs 100 each at a discount of 5% in full satisfaction of the purchase consideration in favour of Cayns Ltd. Pass necessary Journal entries in the books of Venus Ltd. for the above transactions. Also identify the value observed by Venus Ltd.
4 KK Ltd. obtained a loan of Rs 10,00,000 from State Bank of India @ 9% interest. The company issued Rs 15,00,000; 9% Debentures of Rs 100 each, in favour of State Bank of India as collateral security. Pass necessary journal entries for the above transactions.
(i)When the company decided not to record the issue of 9% Debentures as collateral security.
(ii) When the company decided to record the issue of 9% Debentures as collateral security.
5 VK Ltd. purchased machinery from Modern Equipment Manufacturers Ltd. The company paid the vendors by issue of some equity shares and debentures and the balance through an acceptance in their favour payable after three months. The accountant of the company while journalizing the above mentioned transactions, left some items blank. You are required to fill in the blanks.
6 X ltd. purchased machinery from Y ltd. and payment was made as follows:
(i)By issuing 10,000 equity shares of Rs 10 each at a premium of 10%.
(ii)By issuing 200; 9% debentures of Rs 100 each at a discount of 10%.
(iii)Balance by accepting a bill of exchange of Rs 50,000 payable after one month.
Journalise these transactions in the books of X ltd.
7 Star Ltd. purchased assets of Rs 99,000 from Moon Ltd. It was agreed that the purchase consideration will be paid by issuing 11% Debentures of Rs 100 each. Pass journal entries when debentures have been issued
(i) at par, (ii) at premium of 10% and (iii) at a discount of 10%.
8 X Ltd. issued 6,000 Debentures of Rs 100 each at a discount of 6% on 1st April, 2014. The Debentures were repayable in instalments of Rs 2,00,000 each starting from 31st March, 2016. Show the Discount on Issue of Debentures Account for the years 2014- 15 to 2017-18.
9 Boots Ltd. issued Rs 6,00,000; 8% Debentures at a discount of 6%. The Debentures were redeemable in four equal annual instalments. Pass necessary Journal Entries for issue of debentures and prepare ‘Discount on Issue of Debentures Account’ for four yea Rs Show workings clearly.
10 Mother Ltd. has Rs 20,00,000; 9% Debentures of Rs 100 each of which half the amount is due for redemption at a premium of 5%. These debentures have been redeemed out of profits. The company has in its Debenture Redemption Reserve Account a balance of Rs 1,00,000. State the amount required to be transferred to Debenture Redemption Reserve.
11 On 1st April, 2014, the following balances appeared in the books of Blue & Star Ltd.
10% Debenture (Redeemable on 31st August, 2018) Rs 20,00,000
Debenture Redemption Reserve Rs 2,00,000
The company met the requirements of Companies Act, 2013 regarding
Debentures Redemption Reserve and Debenture Redemption Investments and redeemed the debentures. Ignoring interest on Debenture Redemption Investments, pass necessary journal entries for the above transactions in the books of the company.
12 Max Ltd had 15,000; 10% Debentures of Rs100 each outstanding as on 1st April, 2017, redeemable at a premium of 15% on 31st March, 2018. It decided to redeem the debentures out of profits. Assume that the company had adequate balance in Debenture Redemption Reserve and had invested on 1st April, 2017 the required amount in Bank Fixed Deposit earning interest @8% p.a. Bank deducted TDS @10%. All debentures were redeemed as per the terms of issue.
Pass necessary journal entries in the books of the company for the redemption of the debentures. Identify the values followed by Max Ltd. in redeeming the debentures.
13 On 1st April, 2017 Linux Ltd. issued 500; 9% debentures of Rs 500 each at a discount of 4% redeemable at a premium of 5% after three yea Rs Pass necessary journal entries for issue of debentures and debenture interest for the year ended 31st March, 2018 assuming that interest is payable annually on 31st March, and the rate of tax deducted at source is 10%. The company closes its books on 31st March every year.
14 On 31st March, 2018 Green Ltd. had the following balances in its books.
Rs
9% Debenture 6,00,000
Debenture Redemption Reserve 1,00,000
Debenture Redemption Investment 45,000
General Reserve 1,00,000
On that date, the company decided to transfer Rs 50,000 to Debenture Redemption Reserve out of General Reserve and redeem debentures of Rs 3,00,000. The company also decided to transfer proportionate amount out of Debentures Redemption Reserve to General Reserve after redemption. Pass necessary journal entries in the books of the company.
15 On 1st April, 2014, KK Ltd. invited applications for issuing 5,000; 10% Debentures of Rs 1,000 each at a discount of 6%. These Debentures were repayable at the end of 3rd year at a premium of 10%. Applications for 6,000 debentures were received and the debentures were allotted on pro rata basis to all applicants. Excess money received with applications was refunded.
The Directors decided to transfer the minimum amount to Debenture Redemption Reserve on 31st March, 2016. On 1st April, 2016, the company invested the necessary amount in 9% bank fixed deposit as per provisions of Companies Act, 2013. Tax was deducted at source by bank on interest @10% p.a.
Pass necessary journal entries for issue and redemption of debentures. Ignore entries relating to writing off loss on issue of debentures and interest paid on debentures.
Please click on below link to download CBSE Class 12 Accountancy Issue And Redemption of Debentures Worksheet Set A
