Nena Limited issued 50,000, 10% debentures of Rs. 100 each on the basis of the following conditions: a. Debentures issued at par and redeemable at par. b. Debentures issued at discount @ 5% and redeemable at par. c. Debentures issued at premium @ 10% and redeemable at par. d. Debentures issued at par and redeemable at premium @ 10%. e. Debentures issued at discount of 5% and redeemable at a premium of10%. f. Debentures issued at premium of 6% and redeemable at a premium of 4%. Record necessary journal entries in the above mentioned cases at the time of issue and redemption of debentures.
Bank A/c Dr. Rs. 50,00,000 To 10% Debentures A/c Rs. 50,00,000 (Being debentures issued at par)
10% Debentures A/c Dr. Rs. 50,00,000 To Bank A/c Rs. 50,00,000 (Being debentures redeemed at par)
Bank A/c Dr. Rs. 47,50,000 Discount on Issue of Debentures A/c Dr. Rs. 2,50,000 To 10% Debentures A/c Rs. 50,00,000 (Being debentures issued at 5% discount)
10% Debentures A/c Dr. Rs. 50,00,000 To Bank A/c Rs. 50,00,000 (Being debentures redeemed at par)
Bank A/c Dr. Rs. 55,00,000 To 10% Debentures A/c Rs. 50,00,000 To Securities Premium Reserve A/c Rs. 5,00,000 (Being debentures issued at 10% premium)
10% Debentures A/c Dr. Rs. 50,00,000 To Bank A/c Rs. 50,00,000 (Being debentures redeemed at par)
Bank A/c Dr. Rs. 50,00,000 Loss on Issue of Debentures A/c Dr. Rs. 5,00,000 To 10% Debentures A/c Rs. 50,00,000 To Premium on Redemption of Debentures A/c Rs. 5,00,000 (Being debentures issued at par redeemable at premium)
10% Debentures A/c Dr. Rs. 50,00,000 Premium on Redemption of Debentures A/c Dr. Rs. 5,00,000 To Bank A/c Rs. 55,00,000 (Being debentures redeemed at 10% premium)
Bank A/c Dr. Rs. 47,50,000 Loss on Issue of Debentures A/c Dr. Rs. 7,50,000 To 10% Debentures A/c Rs. 50,00,000 To Premium on Redemption of Debentures A/c Rs. 5,00,000 (Being debentures issued at 5% discount redeemable at 10% premium)
10% Debentures A/c Dr. Rs. 50,00,000 Premium on Redemption of Debentures A/c Dr. Rs. 5,00,000 To Bank A/c Rs. 55,00,000 (Being debentures redeemed at premium)
Bank A/c Dr. Rs. 53,00,000 Loss on Issue of Debentures A/c Dr. Rs. 2,00,000 To 10% Debentures A/c Rs. 50,00,000 To Securities Premium Reserve A/c Rs. 3,00,000 To Premium on Redemption of Debentures A/c Rs. 2,00,000 (Being debentures issued at 6% premium redeemable at 4% premium)
10% Debentures A/c Dr. Rs. 50,00,000 Premium on Redemption of Debentures A/c Dr. Rs. 2,00,000 To Bank A/c Rs. 52,00,000 (Being debentures redeemed at premium)
Explanation
This question from the NCERT textbook covers all six scenarios of debenture issue and redemption. The key principles are: (1) When debentures are issued at premium, the premium is credited to Securities Premium Reserve Account; (2) When debentures are issued at discount, the discount is debited to Discount on Issue of Debentures Account; (3) When debentures are redeemable at premium, the premium on redemption must be provided at the time of issue by debiting Loss on Issue of Debentures Account; (4) When both discount on issue and premium on redemption exist, both amounts are combined and debited to Loss on Issue of Debentures Account.