Practice Questions on Issue of Debentures Class 12 Accountancy

1. State the head and subhead under which debentures are shown in company's balance sheet. 

2. Prakash limited issued 2000, 15% debentures of Rs 100 each at par, payable as follows: rupees 25 on application, rupees 25 on allotment and balance on first and final call. Applications were received for 1500 debentures. All the money was duly received. Pass the necessary journal entries. 

3. Which account will be debited when debentures are issued as collateral security against bank loan?

4. X Ltd took over the following assets and liabilities of Y Ltd.: Land and Building Rs 20,00,000, Stock Rs 500,000, Debtors Rs 250,000 and Creditors Rs 200,000. X Ltd paid purchase consideration by issuing bank draft of Rs 1600,000 and 50,000 equity shares of Rs 20 each at 10% premium. Calculate purchase consideration and pass journal entries in the books of X Ltd. 

5. Give necessary journal entries in the following conditions:
a. Issued 2,000, 12% debentures of 100 each at a premium of 5%, redeemable at a premium of 10%.
b. Took a long-term loan of 6,00,000 from SBI Bank and issued 5,000;10% Debentures of 100 each as collateral security.

6. Gujrat Gas ltd. Issued 600000 ,9% debentures of Rs.1000 each payable as follows: On application Rs.300, On allotment Rs.700. The debentures were fully subscribed and all the money was duly received. As per terms of issue, the debentures are redeemable at Rs.1100 per debenture. Record necessary journal entries regarding the issue of debentures.

7. Disha Ltd.  purchased machinery from Nisha Ltd.  and paid to Nisha Ltd.as follows. (i) By issuing 10,000, equity shares of Rs10 each at a premium of 10%. (ii)  By issuing 200, 9% debentures of Rs 100 each at a discount of 10%. (iii)  Balance by accepting a bill of exchange of Rs 50,000 payable after one month. Pass necessary journal entries in the books of Disha Ltd. for the purchase of machinery and making payment to Nisha Ltd.

8. Sagar Ltd. purchased machinery from Ranjan Ltd. and paid to Ranjan Ltd. as follows: (a)By issuing 1,000 equity shares of Rs 10 each at a premium of 10%, (b)By issuing 500, 9% debentures of Rs 100 each at a discount of 10%, (c) Balance by issuing cheque of Rs 25,000. Showing your calculations, calculate the purchase consideration. Also, pass the required journal entries in the books of Sagar Ltd.

9. Sudhir ltd issued 25,000 9% debentures of Rs 100 each at discount of Rs 4 per debenture on 1st April 2017. On the same date, it purchased assets of Rs 850,000 and liabilities of Rs 150,000 of Gopal ltd at an agreed price of Rs 720,000. The purchase consideration was discharged by issuing 12% debentures of Rs 100 each at a premium of 20%. On the same date, it took a loan from bank for Rs 700,000 and issued 10,000 debentures of Rs 100 each as collateral security. Pass the necessary entries in the books of Sudhir Ltd.

10. On 1st April 2019, Jagriti Ltd issued 5000 8% debentures of Rs 100 each at a discount of 10% redeemable at a premium of 10%. The issue was fully subscribed and amount was duly received. The company had a balance of Rs 35,000 in securities premium reserve on that date. On 1st January 2020, it issued 50,000 equity shares of Rs 10 each at a premium of Rs 1 per share. Issue was fully subscribed. Pass the necessary entries for issue of debentures, shares and writing off of discount/loss on issue of debentures. 

11. On 1st April 2019, Z Ltd issued 10,000 8% debentures of Rs 100 each at a premium of 5% to be redeemable at a premium of 10% after 5 years. The entire amount was payable on application. The issue was oversubscribed to the extent of 10,000 debentures and the allotment was made proportionately to all the applicants. The securities premium amount has not been utilized for any other purpose during the year. Give journal entries for the issue of debentures and writing off loss on issue of debentures. 

12. On 1st April 2019, Kumar Ltd issued 4000 9% debentures of Rs 100 each at a discount of 6%, redeemable at a premium of 5% after three years. The company closes its books on 31st March each year. Interest on 9% debentures is payable on 30th September and 31st March every year. The rate of tax deducted at source is 10%. Pass the necessary journal entries for the issue of debentures and interest on debenture for the year ended 31st March 2020.