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Terms of Issue of Debentures

Journal entries can be made in the following cases :

(i)         A Co. issued Rs.40,000     6% debentures at premium of   5% redeemable at par.

(ii)       A Co. issued Rs.40,000     6% debentures at discount of 10% redeemable at par.

(iii)    A Co. issued Rs.40,000     6% debentures at par redeemable at 10% premium.

(iv)     A Co. issued Rs.40,000     6% debentures at a discount of 5% and redeemable at 5% premium.

 

A company issues the following debentures :

 

(i)    10,000 12% debentures of Rs.100 each at par but redeemable at a premium of 5% after 5 years;

 

(ii)        10,000  12% debentures of Rs.100 each at a discount of 5% but redeemable at a premium of 5% after 5 years;

 

(iii)      5,000  12% debentures of Rs.1,000 each at a premium of 10% but redeemable at part after 5 years;

 

(iv)      1,000  14% debentures of Rs.100 each issued to a supplier of machinery costing Rs.95,000. The debentures are repayable after 5 years; and

 

(v)       300  13% debentures of Rs.100 each as a collateral security to a bank who has advanced a loan of Rs.25,000 to the company for a period of 5 years.

Pass the journal entries to record the (a) issue of debentures, and (b) repayment of debentures after the given period.

 





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