Solution of Debentures (Principle of Accounting II)

 2077/08/03 (18 November, 2020 Wednesday) 

Exam 2060, Q.N. 4

A company issued 500, 10% debentures of Rs. 100 each at a discount of 10% and redeemable at the end of 5 years at a premium of 5%.

Required: Journal entry for the issue of debentures

Solution:                                  Journal Entries

Date

Particulars

LF

Debit Rs.

Credit Rs.

 

Bank a/c Dr

Discount on issue of debenture a/c Dr.

Loss on issue of debenture a/c Dr.

    To 10%, debenture a/c

    To Premium on redemption of debenture a/c

 (Being redeemable 11% debenture issued)

 

900000

100000

100000

 

 

 

1000000

100000

 

Exam 2061, Q.N. 4

A company issued the following debentures : 1000, 10% debentures of Rs. 100 each at a discount of 5% but payable at a premium of 10% after 10 years.

Required: Journal entry for debentures

Solution:                                  Journal Entries

Date

Particulars

LF

Debit Rs.

Credit Rs.

 

Bank a/c Dr

Discount on issue of debenture a/c Dr.

Loss on issue of debenture a/c Dr.

    To 10%, debenture a/c

    To Premium on redemption of debenture a/c

 (Being redeemable 10% debenture issued)

 

95000

5000

10000

 

 

 

100000

10000


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