Accounting

Issue at 10% Discount and Redeemable at Par:
Nominal Value = 4,000 × ₹ 100 = ₹ 4,00,000
Issue Price = 90% of ₹ 100 = ₹ 90 per debenture
Total Cash Received = 4,000 × 90 = ₹ 3,60,000
Discount on Issue = 4,000 × ₹ 10 = ₹ 40,000
Journal Entry:

Bank A/c Dr. 3,60,000 Discount on Issue of Deb. A/c Dr. 40,000 To 8% Debentures A/c 4,00,000 (Issue of 4,000 8% Debentures @ 10% discount, repayable at par)

Issue at 10% Premium, Redeemable at 5% Premium:
Nominal Value = 1,000 × ₹ 100 = ₹ 1,00,000
Issue Price = ₹ 110 (10% premium)
Redemption Value = ₹ 105 (5% premium)
Total Cash Received = 1,000 × 110 = ₹ 1,10,000
Premium on Redemption = 1,000 × ₹ 5 = ₹ 5,000
Journal Entry:

Bank A/c Dr. 1,10,000 To 8% Debentures A/c 1,00,000 To Securities Premium A/c 10,000 (Issue of 1,000 8% Debentures @ 10% premium) Loss on Issue of Debentures A/c Dr. 5,000 To Premium on Redemption of Debentures A/c 5,000 (Premium payable on redemption of debentures)

Given:
Amount paid to Rajan = ₹ 2,20,000
Balance in Rajan’s Capital A/c = ₹ 1,80,000
Extra amount paid over capital = ₹ 2,20,000 – ₹ 1,80,000 = ₹ 40,000

This extra payment represents Rajan’s share of goodwill.

Old Ratio (Diksha : Krish : Rajan) = 3 : 2 : 1
Rajan’s Share =

New Ratio (Diksha : Krish) after Rajan's retirement = 3 : 2 (as per old ratio)
Gaining Ratio = New Ratio – Old Ratio
Diksha’s gain =
Krish’s gain =

LCM of 10 and 15 = 30, so gaining ratio = 3 : 2

Rajan’s share of goodwill = ₹ 40,000
Thus, Diksha’s share =
Krish’s share =

Journal Entry:

Diksha’s Capital A/c Dr. 24,000 Krish’s Capital A/c Dr. 16,000 To Rajan’s Capital A/c 40,000 (Being Rajan’s share of goodwill adjusted in gaining ratio)

When shares are forfeited, the amount received from the defaulting shareholder is retained by the company.
This forfeited amount can be used to allow a discount while reissuing the shares, but only up to the amount originally received.
Given:
- Number of shares forfeited = 300
- Face value per share = ₹ 10
- Total forfeited amount = ₹ 2,700
To calculate the maximum discount per share, we divide the total forfeited amount by the number of shares:

Hence, the company can reissue these shares at a price as low as ₹ 1 per share (₹ 10 - ₹ 9 discount).
This complies with the Companies Act which states that the discount allowed on reissue cannot exceed the forfeited amount.