question_answer

Voice Ltd decided to set up a hydro power plant in the tribal areas. To meet its new financial requirement, company has issued 9,000,12% debentures of Rs.100 each at par on 1st April, 2015, redeemable at 10% premium in three yearly installments by draw of lots as follows:

On 31 st March, 2016	1,800 12% Debentures
On 31st March, 2017	3,600 12% Debentures
On 31st March, 2018	3,600 12% Debentures

The company complied with the legal requirements with respect to debenture redemption reserve and investment (made in government securities on 1st April each year) Pass journal entries for issue of debentures and prepare loss on issue of debentures account. Also, identify the value that company wishes to propogate.

Answer:

                                                                        JOURNAL

Date	Particulars		L.F.	Amt (Dr)	Amt (Cr)
2015	Bank	Dr		9,00,000
April 1	To Debenture Application and Allotment A/c				9,00,000
	(Being debenture application money received)
	Debenture Application and Allotment A/c	Dr		9,00,000
	Loss on Issue of Debentures A/c	Dr		90,000
	To 12% Debentures A/c				9,00,000
	To Premium on Redemption of Debentures A/c				90,000
	(Being 12% debentures allotted at par and redeemable of 10% premium)

Dr                                             Loss on Issue of Debentures Account                                      Cr

Date	Particulars	Amt (Rs,)	Date	Particulars	Amt (Rs.)
2015			2016
April 1	To Premium on Redemption of Debentures A/c		March 31	By Statement of Profit and Loss	18,000
		90,000	March 31	By Balance c/d	72,000
		90,000			90,000
2016			2017
April 1	To Balance b/d	72,000	March 31	By Statement of Profit and Loss	36,000
			March 31	By Balance c/d	36,000
		72,000			72,000
2017			2018
April 1	To Balance b/d	36,000	March 31	By Statement of Profit and Loss	36,000
		36,000			36,000