Foundation Revision Worksheet Debentures: Credent Professional Studies

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FOUNDATION REVISION WORKSHEET

DEBENTURES

Q.1. Give Journal Entries in respect of the following independent situations –


1. 50,000, 8% Debenture of ` 100 each were issued and redeemable at par any time after 6
years.
2. 10,000, 9% Debentures of ` 50 each were issued at a discount of 8%, redeemable at par
after 9 years.
3. ` 80,000 9% Debentures were issued at a premium of 5%, redeemable at par.
4. ` 80,000 9% Debentures were issued at par and redeemable at 10% Premium.
5. 5,000, 9% Debentures of ` 1000 each issued at a discount of 6%, and redeemable at a
premium of 8%.

Q.2. Journalise the following issue of Debentures in the books of the Issuing Company (each
situation is independent)
(a) 25,000 nos. of 8% Debentures of ` 100 each, issued at a premium of ` 15 per
Debenture, the total amount is collected at the time of application itself.
(b) Machinery worth ` 38 lakhs was purchased. The amount due to the Vendor was settled
by way of issue of 6% Debentures of ` 400 each, issued at a discount of 5%.
(c) 50,000 nos. 9% Fully Convertible Debentures issued at face value of ` 50 each, the
entire amount being collected at the time of application.

Q.3. Indra Company obtained a Cash Credit Limit of ` 250 Lakhs from Heavens Bank Ltd. In
addition to the primary security of stocks and book debts of the Company, the loan agreement
provided for the issue of 1,00,000 7.5% Debentures of a face value of ` 300 per bond, as
Collateral Security. How will this issue of Debentures be treated in the books of Indra
Company?

Q.4. Aakash Ltd issued 5,00, 10% Debentures of ` 100 each on 1st January at a discount of 10%
redeemable at a premium of 10%. Give Journal Entries, assuming that the interest was
payable half-yearly on 30th June and 31st December and tax deducted at source is 10%. The
Company follows calendar year as its accounting year.

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CREDENT PROFESSIONAL STUDIES

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