Accounting For Share And Debenture Capital

Journal Entries:

%5Cbegin%7Barray%7D%7B%7Cl%7Cc%7Cc%7C%7D%0A%5Chline%0A%5Ctextbf%7BParticulars%7D%20%26%20%5Ctextbf%7BDr.%20Amount%20(Rs.)%7D%20%26%20%5Ctextbf%7BCr.%20Amount%20(Rs.)%7D%20%5C%5C%0A%5Chline%0A%5Ctextbf%7BCase%20(i)%3A%7D%20%26%20%26%20%5C%5C%0A%5Ctext%7BBank%20A%2Fc%20Dr.%7D%20%26%2033%2C00%2C000%20%26%20%5C%5C%0A%5Ctext%7BTo%2010%5C%25%20Debentures%20A%2Fc%7D%20%26%20%26%2030%2C00%2C000%20%5C%5C%0A%5Ctext%7BTo%20Securities%20Premium%20A%2Fc%7D%20%26%20%26%203%2C00%2C000%20%5C%5C%0A%5Chline%0A%5Ctextbf%7BCase%20(ii)%3A%7D%20%26%20%26%20%5C%5C%0A%5Ctext%7BBank%20A%2Fc%20Dr.%7D%20%26%204%2C60%2C000%20%26%20%5C%5C%0A%5Ctext%7BLoss%20on%20Redemption%20A%2Fc%20Dr.%7D%20%26%2040%2C000%20%26%20%5C%5C%0A%5Ctext%7BTo%2010%5C%25%20Debentures%20A%2Fc%7D%20%26%20%26%204%2C00%2C000%20%5C%5C%0A%5Ctext%7BTo%20Securities%20Premium%20A%2Fc%7D%20%26%20%26%2060%2C000%20%5C%5C%0A%5Chline%0A%5Ctextbf%7BCase%20(iii)%3A%7D%20%26%20%26%20%5C%5C%0A%5Ctext%7BBank%20A%2Fc%20Dr.%7D%20%26%204%2C75%2C000%20%26%20%5C%5C%0A%5Ctext%7BDiscount%20on%20Issue%20A%2Fc%20Dr.%7D%20%26%2025%2C000%20%26%20%5C%5C%0A%5Ctext%7BLoss%20on%20Redemption%20A%2Fc%20Dr.%7D%20%26%2050%2C000%20%26%20%5C%5C%0A%5Ctext%7BTo%2010%5C%25%20Debentures%20A%2Fc%7D%20%26%20%26%205%2C00%2C000%20%5C%5C%0A%5Ctext%7BTo%20Securities%20Premium%20A%2Fc%7D%20%26%20%26%2050%2C000%20%5C%5C%0A%5Chline%0A%5Cend%7Barray%7D

Step 1: Calculate the total premium on redemption:
The debentures are redeemable at a premium of

10%5C%25

, so the premium on redemption is:

%7BPremium%20on%20Redemption%7D%20%3D%2010%2C000%20%5Ctimes%20Rs.10%20%3D%20Rs.1%2C00%2C000.

Step 2: Calculate the total premium received on issue:
The debentures were issued at a premium of

5%5C%25

, so the premium received on issue is:

%7BPremium%20on%20Issue%7D%20%3D%2010%2C000%20%5Ctimes%20Rs.5%20%3D%20Rs.50%2C000.

Step 3: Calculate the loss on issue of debentures:
The loss on issue of debentures is the difference between the premium on redemption and the premium received on issue:

%7BLoss%20on%20Issue%7D%20%3D%20Rs.1%2C00%2C000%20-%20Rs.50%2C000%20%3D%20Rs.1%2C00%2C000.

Conclusion:
The loss on issue of debentures account will be debited by

Rs.1%2C00%2C000

High-Yield Trend

Chapter Questions
3 MCQs

Official Solution

Official Solution

Official Solution

Accounting For Share And Debenture Capital

High-Yield Trend

Chapter Questions 3 MCQs

Official Solution

Official Solution

Official Solution

Chapter Questions
3 MCQs