Ad Under Header

on 1st April 2019 bright Ltd. issued 400000, 6% debentures of 100 is at a discount of 5% redeemable after 3 years the amount per debenture was payable as on application 80 per debenture on allotment balance amount the debenture were fully subscribed and all money was really received pass necessary journal entries on issue of debentures.See answer

on 1st April 2019 bright Ltd issued 400000 6 debentures of 100 is at a discount of 5 redeemable after 3 years the amount per debenture was payable as on application 80 per debenture on allotment…

Question

Basic Answer

Step 1: Calculate the issue price per debenture.

The debentures are issued at a 5% discount. Therefore, the issue price is 100 – (5% of 100) = 100 – 5 = 95.

Step 2: Calculate the total amount received on application.

400,000 debentures were issued at ₹80 per debenture on application. Total application money received = 400,000 * ₹80 = ₹32,000,000.

Step 3: Calculate the total amount received on allotment.

The balance amount per debenture is 95 – 80 = ₹15. Total allotment money received = 400,000 * ₹15 = ₹6,000,000.

Step 4: Calculate the total discount on issue of debentures.

Total discount = 400,000 debentures * ₹5 discount per debenture = ₹2,000,000

Step 5: Journal Entries

Here are the necessary journal entries:

Date: April 1, 2019

Entry 1: Application Money Received

Account NameDebit (₹)Credit (₹)
Bank Account32,000,000
Application Money Account32,000,000
Being application money received

Entry 2: Allotment Money Received

Account NameDebit (₹)Credit (₹)
Bank Account6,000,000
Allotment Money Account6,000,000
Being allotment money received

Entry 3: Transferring Application and Allotment Money to Debentures Account

Account NameDebit (₹)Credit (₹)
Application Money Account32,000,000
Allotment Money Account6,000,000
Discount on Issue of Debentures2,000,000
6% Debentures Account38,000,000
Being application and allotment money transferred to debentures account

Final Answer

The journal entries reflect the receipt of application and allotment money and the recording of the debentures issued at a discount. The discount is recorded as a separate expense.

Posting Komentar