DK Goel Solutions Class 12 Accountancy Chapter 8 Company Accounts Issue of Debentures

Short Answer Questions

Question 1.   

Solution 1        Debentures may be issued either at par, at premium or at a discount.

Issue of Debentures at Par:-

Issue of Debentures at Discount:- There are no restrictions on the issue of debentures at discount, whereas shares cannot be issued at discount. 

Dev Ltd. issued 5,000, 10% Debentures of Rs. 100 each at a discount of 10%.

When the company issues debentures at a price which is lee then their face or nominal value, the debentures are said to have been issued at a discount. Discount or Loss on issue of debentures is a capital loss. It can be written off by debiting to securities premium reserve account or statement of profit or loss.

Question 2.

Solution 2         A company purchases some assets from the vendor and instead of paying the vendor in cash, the company may decide to issue debentures to the vendor in payment of purchases consideration. Such an issue of debentures to vendors in known as issue of debentures for debentures for consideration other than cash.

Question 3.

Solution 3        When a company takes a loan from a Bank or from some other party, the company may have to issue debentures as a subsidiary or secondary security in addition to the principal security. Collateral security means secondary security in addition to the principal security. There are two methods of dealing with such debentures in the books of accounts of the company:-

1. First Method:- In this method, no entry need to be passed in the books of the company, as the debentures are not actually issued, but only given away as collateral security. As only for taking of a loan entry as passed:-

2. Second Method:- In this method, the entry for issuing debentures as collateral security is also recorded with the entry for taking the loan.

Question 4.  

Solution 4           (a) When the interest is due:-

If a Company pays interest on debentures half-yearly on 30^th June and 31^st December, while preparing the balance sheet on 31^st March, 2019, if the interest for the period ending 31^st December, 2018 remains unpaid, it will be called ‘Interest accrued and due’.

(b) When the interest is paid:-

If a Company pays interest on debentures half-yearly on 30^th June and 31^st December, while preparing the balance sheet on 31^st March, 2018 the interest for the period from 1^st January, 2018 to 31^st March, 2018 will be called ‘Interest accrued but not due’.

Question 5.  

Solution 5        The debentures are issued with the specific condition that the company will pay a premium at the time of their redemption. Although, such premium will be paid at the time of actual redemption, but as it is a known loss the Company records such loss at the time of issue by debiting an account called, “Loss on issue of debentures A/c”.

Example:- If a debenture of Rs. 100 is issued at Rs. 100 and is redeemable at Rs. 105, the following entries will be passed:

Entries For Issue:

Question 6.  

Solution 6        If a debenture of Rs. 100 is issued at Rs. 98 and is redeemable at Rs. 105 the following entries will be passed:-

Entries For Issue:

Question 7.

Solution 7         Oversubscription of Debentures means that the company has received applications for more number of debentures than it has issued. In such a situation, the company may make allotment, by any of the following three options or combination:

First Alternative – Rejecting Excess Applications.

Second Alternative – Partial or pro-rata allotment.

Third Alternative – A combination of the Above two alternatives.

Question 8.   

Solution 8

Question 9.   

Solution 9

Question 10. 

Solution 10

Question 11.   

Solution 11

Numerical Questions:-

Question 1.   

Solution 1   

Question 2.  

Solution 2

Question 3.   

Solution 3

Question 4.  

Solution 4

Question 5.  

Solution 5

Question 6.    

Solution 6

Question 7.   

Solution 7

Question 8.  

Solution 8           

Question 9.    

Solution 9           

Question 10. 

Solution 10

Question 11.

Solution 11    

Question 12. 

Solution 12

Question 13.  

Solution 13

Question 14.  

Solution 14

Question 15. 

Solution 15

Question 16. 

Solution 16

Question 17.  

Solution 17

Question 18.  

Solution 18

Question 19. 

Solution 19

Question 20.  

Solution 20

Question 21. 

Solution 21

Question 22.   

Solution 22

Question 23. 

Solution 23

Question 24. 

Solution 24

Question 25.  

Solution 25

Question 26.  

Solution 26         

Question 27. 

Solution 27

Question 28. 

Solution 28

Question 29.  

Solution 29

Question 30.  

Solution 30

Question 31.   

Solution 31

Question 32.  

Solution 32

Question 33. 

Solution 33

Question 34. 

Solution 34

Question 35.   

Solution 35

Question 36.  .

Solution 36

Question 37.  

Solution 37

Question 38.  

Solution 38

Question 39.  

Solution 39

Question 40.

Solution 40

Question 41.

Solution 41                                                                

Question 42.  

Solution 42

Question 43. 

Solution 43

Question 44. 

Solution 44

Question 45.   

Solution 45

Question 46. 

Solution 46

Question 47.     

Solution 47

Question 48. 

Solution 48        

Question 49.

Solution 49         

Question 50.  

Solution 50

Question 51.   

Solution 51

Question 52.   

Solution 52

Question 53.  

Solution 53