Issue and Redemption of Debentures Class 12 MCQ with Answer are covered in this Article. Issue and Redemption of Debentures MCQ Test contains 29 questions. Answers to MCQ on Issue and Redemption of Debentures Class 12 Accountancy are available at the end of the last question. These MCQ have been made for Class 12 students to help check the concept you have learnt from detailed classroom sessions and application of your knowledge.
Issue and Redemption of Debentures Class 12 MCQ
1.JK Ltd issued 12000, 13 % Debentures of Rs. 30 each, payable as, Rs. 12 on Application, and the remaining amount on Allotment. The Debentures are redeemable after 10 years. All the Debentures were applied for and allotted. All money was received. Journal entry for Application money received will be:
(a) Bank A/c Dr 144000
To 13 % Debentures A/c 144000
(b) Bank A/c Dr 144000
To 13 % Debenture Application A/c 144000
(c) 13 % Debenture Application A/c Dr 144000
To 13 % Debentures A/c 144000
(d) None of the above
Answer
Answer: (b) Bank A/c Dr 144000
To 13 % Debenture Application A/c 144000
Explanation: Bank A/c Dr 144,000
To 13 % Debenture Application A/c 144,000
( 12,000 X 12 )
2.DD Ltd. issued 25000, 14 % Debentures of Rs. 15 each, payable as, Rs. 7 on Application, and the remaining amount on Allotment. The Debentures are redeemable after 9 years. All the Debentures were applied for and allotted. All money was received. Journal entry for money received on Allotment will be:
(a)Bank A/c Dr 1200000
To 11% Debenture Allotment A/c 1200000
(b) Bank A/c Dr 1200000
To 11% Debentures A/c 1200000
(c) 11% Debenture Allotment A/c Dr 1200000
To 11% Debentures A/c 1200000
(d) None of the above
Answer
Answer: (a)Bank A/c Dr 1200000
To 11% Debenture Allotment A/c 1200000
Example: Bank A/c Dr 1200000
To 11 % Debenture Allotment A/c 1200000
( 80,000 X 15 )
3.DK Ltd. issued 32000, 9% Debentures of Rs. 200 each, payable as, Rs. 120 on Application, and the remaining amount on Allotment. The Debentures are redeemable after 15 years. All the Debentures were applied for and allotted. All money was received. Journal entry for money due on Allotment will be:
(a) Bank A/c Dr 2560000
To 9% Debentures A/c 2560000
(b) 9% Debenture Allotment A/c Dr 2560000
To 9% Debentures A/c 2560000
(c) 9% Debenture Allotment A/c Dr 2560000
To 9% Debenture application 2560000
(d) None of the above
Answer
Answer: (b) 9% Debenture Allotment A/c Dr 2560000
To 9% Debentures A/c 2560000
Explanation: 9% Debenture Allotment A/c Dr 2,560,000 ( 32,000 X 80 )
To 9% Debentures A/c 2,560,000
4.Akash Ltd. issued 2500, 18 % Debentures of Rs 50 each, for which the entire amount was received at the time of Application. Journal entry for receipt of the money at the time of Application will be:
(a) Bank A/c Dr 125000
To 18% Debenture Application
and Allotment A/c 125000
(b) Bank A/c Dr 125000
To 18% Debenture Application A/c 125000
(c) 18% Debenture Application
and Allotment A/c Dr 125000
To 18% Debenture Application A/c 125000
(d) None of the above
Answer
Answer: (a) Bank A/c Dr 125000
To 18% Debenture Application
and Allotment A/c 125000
Explanation: Bank A/c Dr 125000
To 18% Debenture Application
and Allotment A/c 125000
( 2,500 X 50 )
when whole amount received in a single installment then Debenture Application and Allotment a/c credited instead of only Application.
5.DK Ltd. issued 21000, 5% Debentures of Rs 30 each at a premium of Rs 12 per Debenture payable as : on Application Rs 12 ,on Allotment Rs 30. The Debentures were fully subscribed and all money was duly received. Journal entry, at the time when the Allotment money is due will be:
(a) Bank A/c Dr 630000
To 5% Debentures A/c 630000
(b) 5% Debenture Allotment A/c Dr 630000
To 5% Debentures A/c 378000
To Security premium Reserve A/c 252000
(c) 5% Debenture Allotment A/c Dr 378000
To 5% Debentures A/c 126000
To Security premium Reserve A/c 252000
(d) None of the above
Answer
Answer: (b) 5% Debenture Allotment A/c Dr 630000
To 5% Debentures A/c 378000
To Security premium Reserve A/c 252000
Explanation: Entry for Allotment money due
5% Debenture Allotment A/c Dr 630000
To 5% Debentures A/c 378000
( 21,000 X 18 ) 30 (-) 12
To Security premium Reserve A/c 252000
( 21,000 X 12 )
Issue and Redemption of Debentures Class 12 MCQ
6.Amit Ltd. issued 22000, 7 % Debentures of Rs 20 each at a premium of Rs 12 per Debenture payable as : on Application Rs 12, on Allotment Rs 20. The Debentures were fully subscribed and all money was duly received. Journal entry for receipt of Allotment money will be:
(a) Bank A/c Dr 176000
To 7% Debentures A/c 176000
(b) Bank A/c Dr 440000
To 7% Debentures A/c 176000
To Security premium Reserve A/c 264000
(c) Bank A/c Dr 440000
To 7% Debenture Allotment A/c 440000
(d) None of the above
Answer
Answer: (c) Bank A/c Dr 440000
To 7% Debenture Allotment A/c 440000
Explanation: Entry for Allotment money due
Bank A/c Dr 440000
To 7% Debenture Allotment A/c 440000
( 22,000 X 20 )
7.Ankush Ltd. issued 60000, 6% Debentures of Rs. 200 each at a discount of 5% on 1st April 2017, payable as Rs 60 on Application, and balance on Allotment. The Debentures are redeemable after 20 years. Journal Entry for Allotment money due will be:
(a) 6% Debenture Allotment A/c Dr 3600000
Discount on Issue of Debentures A/c Dr 600000
To 6% Debentures A/c 4200000
(b) 6% Debenture Allotment A/c Dr 7800000
Discount on Issue of Debentures A/c Dr 600000
To 6% Debentures A/c 8400000
(c) Discount on Issue of Debentures A/c Dr 600000
To 6% Debentures A/c 600000
(d) None of the above
Answer
Answer: (b) 6% Debenture Allotment A/c Dr 7800000
Discount on Issue of Debentures A/c Dr 600000
To 6% Debentures A/c 8400000
Explanation: Entry for Allotment money due
6% Debenture Allotment A/c Dr 7800000
[60,000 X ( 200 – 60 – 10 )]
Discount on Issue of Debentures A/c Dr 600000
[60,000 X ( 200 x 5 / 100 )]
To 6% Debentures A/c 8400000
[60,000 X ( 200 – 60 )]
8.AKV Ltd. issued 135000, 12 % Debentures of Rs 80 each at a discount of 5 % on 1st April 2017, payable Rs 60 on Application and the balance on Allotment. The Debentures are redeemable after 20 years. Amount of discount per Debenture will be:
(a) Rs. 6750
(b) Rs. 4
(c) Rs. 960
(d) None of the above
Answer
Answer: (b) Rs. 4
Explanation: Amount of Discount per Debenture
Value per Debenture = 80
Discount per Debenture = Value per Debenture X Discount Rate
Discount per Debenture = 80 X \(\cfrac{ 5 }{100 }\)
= Rs. 4
9.A company purchased assets of the book value of Rs 120000 from Gold Ltd. It was agreed that the purchase consideration would be paid by issuing 12 % Fully paid Debentures of Rs 20 each. If Debentures are issued at par then how many such Debentures would be issued by the company to Gold Ltd
(a) 6000
(b) 6200
(c) 5800
(d) None of the above
Answer
Answer: (a) 6000
Explanation: Calculation of number of debentures issued by the company
Number of Debenture issued = Total amount of consideration payable /Value of per Debenture issued
Number of Debenture issued = 120000/20
Number of Debenture issued = 6000
10.A company purchased assets of the book value of Rs 1000000 from Atul Ltd It was agreed that the purchase consideration would be paid by issuing 17 % Debentures of Rs 100 each. If Debentures are issued at par journal entry for issue of Debenture to Atul Ltd will be:
(a) Bank A/c Dr 1000000
To 17% Debentures A/c 1000000
(b) Atul Ltd Dr 1000000
To 17% Debentures A/c 1000000
(c) Assets A/c Dr 1000000
To 17% Debentures A/c 1000000
(d) None of the above
Answer
Answer: (b) Atul Ltd Dr 1000000
To 17% Debentures A/c 1000000
Explanation: Calculation of number of debentures issued by the company
Number of Debenture issued = Total amount of consideration payable/Value of per Debenture issued
Number of Debenture issued = 1000000/100
Number of Debenture issued = 10000
Entry for issue of debenture
Atul Ltd Dr 1000000
To 17% Debentures A/c 1000000
( 10000 X 100 )
Issue and Redemption of Debentures Class 12 MCQ
11.A company purchased assets of the book value of Rs 1100000 from ML Ltd. It was agreed that the purchase consideration would be paid by issuing 13 % Debentures of Rs 50 each. If Debentures are issued at par journal entry for purchase of assets from ML Ltd will be:
(a) Assets A/c Dr 1100000
To Bank A/c 1100000
(b) Assets A/c Dr 1100000
To ML Ltd A/c 1100000
(c) Assets A/c Dr 1100000
To 13 % Debentures A/c 1100000
(d) None of the above
Answer
Answer: (b) Assets A/c Dr 1100000
To ML Ltd A/c 1100000
Explanation: Entry for purchase of assets:
Assets A/c Dr 1100000
To ML Ltd A/c 1100000
12.Aarti Ltd. purchased assets of the book value of Rs 1725000 from Agni Ltd. It was agreed that the purchase consideration would be paid by issuing 15 % Debentures of Rs 60 each. If Debentures are issued at premium of 15 %. The number of Debentures issued to Agni Ltd. will be:
(a) 28750
(b) 4050
(c) 24700
(d) 25000
Answer
Answer: (d) 25000
Explanation: Calculation of number of debentures issued by the company
Number of Debenture issued = Total amount of consideration payable/Value of per Debenture issued
Number of Debenture issued = 1725000/69
Number of Debenture issued = 25000
13.Black Ltd purchased assets of the book value of Rs 140000 from White Ltd. It was agreed that the purchase consideration would be paid by issuing 13 % Debentures of Rs 25 each. If Debentures are issued at premium of 40 %. The journal entry for issue of Debentures to White Ltd will be:
(a) White Ltd A/c Dr 140000
To 13% Debentures A/c 99500
To Security premium reserve A/c 40500
(b) White Ltd A/c Dr 140000
To 13% Debentures A/c 100000
To Security premium reserve A/c 40000
(c) White Ltd A/c Dr 140000
To 13% Debentures A/c 98700
To Security premium reserve A/c 41300
(d) None of the above
Answer
Answer: (b) White Ltd A/c Dr 140000
To 13% Debentures A/c 100000
To Security premium reserve A/c 40000
Explanation: Calculation of number of debentures issued by the company
Number of Debenture issued = Total amount of consideration payable/Value of per Debenture issued
Number of Debenture issued = 140000/35
Number of Debenture issued = 4000
Entry for issue of Debentures to White Ltd:
White Ltd A/c Dr 140000
To 13% Debentures A/c 100000
( 4000 X 25 )
To Security premium reserve A/c 40000
( 4000 X 10 )
14.Akash Ltd purchased Machinery of the book value of Rs 544000 from Tarun Ltd. It was agreed that the purchase consideration would be paid by issuing 9 % Debentures of Rs 80 each. If the Debentures are issued at Discount of 15 %,the number of Debenture issued will be:
(a) 7800
(b) 8000
(c) 7900
(d) None of the above
Answer
Answer: (b) 8000
Explanation: Calculation of number of debentures issued by the company
Number of Debenture issued = Total amount of consideration payable / Value of per Debenture issued
Number of Debenture issued = 544000/(80−12)
Number of Debenture issued = 8000
15.Bansi Ltd purchased Machinery of the book value of Rs 200000 from JD Ltd. It was agreed that the purchase consideration would be paid by issuing 7 % Debentures of Rs 10 each. If the Debentures are issued at Discount of 20 %, the amount of discount will be:
(a) 49500
(b) 48000
(c) 46000
(d) 50000
Answer
Answer: (d) 50000
Example: Calculation of number of debentures issued by the company
Number of Debenture issued = Total amount of consideration payable / Value of per Debenture issued
Number of Debenture issued = 200000/(10−2)
Number of Debenture issued = 25000
Amount of Discount will be = Total number of Debentures issued X Discount on per Debenture
Amount of Discount will be = 25000 X ( 10 X (20/100) )
Amount of Discount will be = 25000 X 2
Amount of Discount will be = 50000
Issue and Redemption of Debentures Class 12 MCQ
16.Big Ltd purchased Machinery of the book value of Rs 90000 from Small Ltd. It was agreed that the purchase consideration would be paid by issuing 7 % Debentures of Rs 10 each. If the Debentures are issued at Discount of 40 %, the journal entry for issue of Debenture will be:
(a) Small Ltd A/c Dr 90000
Discount on issue of Debenture A/c Dr 60000
To 7% Debentures A/c 150000
(b) Small Ltd A/c Dr 90000
To 7% Debentures A/c 90000
(c) Small Ltd A/c Dr 90000
Discount on issue of Debenture A/c Dr 30000
To 7% Debentures A/c 120000
(d) None of the above
Answer
Answer: (a) Small Ltd A/c Dr 90000
Discount on issue of Debenture A/c Dr 60000
To 7% Debentures A/c 150000
Example: Calculation of number of debentures issued by the company
Number of Debenture issued = Total amount of consideration payable /Value of per Debenture issued
Number of Debenture issued = 90000/(10−4)
Number of Debenture issued = 15000
Amount of Discount will be = Total number of Debentures issued X Discount on per Debenture
= 15000 X 4
Amount of Discount will be = 60000
Entry for issue of Debenture:
Small Ltd A/c Dr 90000
Discount on issue of Debenture A/c Dr 60000
To 7 % Debentures A/c 150000
( 15000 X 10 )
17.Bright Ltd purchased assets of Rs 1500000 and took over liabilities of Rs 300000 at an agreed value of Rs 1100000. Bright Ltd issued 4 % Debentures at par in full satisfaction of the purchase price. The journal entry for purchase of asset and liabilities taken over will be:
(a) Sundry Assets A/c Dr 1500000
To Sundry Liabilities A/c 300000
To Vendor A/c 1100000
To Cash/Bank A/c 100000
(b) Sundry Assets A/c Dr 1500000
To Sundry Liabilities A/c 300000
To 4 % Debentures A/c 1200000
(c) Sundry Assets A/c Dr 1500000
To Sundry Liabilities A/c 300000
To Vendor A/c 1100000
To Capital Reserve A/c 100000
(d) None of the above
Answer
Answer: (c) Sundry Assets A/c Dr 1500000
To Sundry Liabilities A/c 300000
To Vendor A/c 1100000
To Capital Reserve A/c 100000
Explanation: Entry for assets and liabilities taken over by Bright Ltd
Sundry Assets A/c Dr 1500000
To Sundry Liabilities A/c 300000
To Vendor A/c 1100000
To Capital Reserve A/c (Balancing fig) 100000
18.ABC Ltd purchased assets of Rs 1280000 and took over liabilities of Rs 120000 at an agreed value of Rs 1300000. ABC Ltd issued 5 % Debentures at par in full satisfaction of the purchase price. The journal entry for purchase of asset and liabilities taken over will be:
(a) Sundry Assets A/c Dr 1280000
Suspense A/c(Balancing fig) Dr 140000
To Sundry Liabilities A/c 120000
To Vendor A/c 1300000
(b) Sundry Assets A/c Dr 1280000
Goodwill A/c (Balancing fig) Dr 140000
To Sundry Liabilities A/c 120000
To Vendor A/c 1300000
(c) Sundry Assets A/c Dr 1280000
To Sundry Liabilities A/c 120000
To 5 % Debentures A/c 1160000
(d) None of the above
Answer
Answer: (b) Sundry Assets A/c Dr 1280000
Goodwill A/c (Balancing fig) Dr 140000
To Sundry Liabilities A/c 120000
To Vendor A/c 1300000
Explanation: Entry for assets and liabilities taken over by ABC Ltd
Sundry Assets A/c Dr 1280000
Goodwill A/c (Balancing fig) Dr 140000
To Sundry Liabilities A/c 120000
To Vendor A/c 1300000
19.JP Ltd issued 24000 11 % Debentures of Rs 15 each payable on Application. The Debenture will be redeemed at part at any time after 12 years. Entries in the books for issue of Debentures will be:
(a) 11% Debentures A/c Dr 360000
To Debenture holders A/c 360000
Debenture holders A/c Dr 360000
To Bank A/c 360000
(b) Bank A/c Dr 360000
To Debenture Application
and Allotment A/c 360000
Debenture Application
and Allotment A/c Dr 360000
To 11% Debentures A/c 360000
(c) Bank A/c Dr 360000
To Debenture Application
and Allotment A/c 360000
Debenture holders A/c Dr 360000
To Bank A/c 360000
(d) None of the above
Answer
Answer: (b) Bank A/c Dr 360000
To Debenture Application
and Allotment A/c 360000
Debenture Application
and Allotment A/c Dr 360000
To 11% Debentures A/c 360000
Explanation: Entry for Application money received:
Bank A/c Dr 360000
To Debenture Application
and Allotment A/c 360000 ( 24000 X 15 )
Entry for transferring application money to 11 % Debentures account:
Debenture Application
and Allotment A/c Dr 360000
To 11 % Debentures A/c 360000
20.ABC Ltd issued 15000 13 % Debentures of Rs 15 each at par payable on Application. The Debenture will be redeemed at premium of 40 % after 8 years. Entries in the books for issue of Debentures will be:
(a) Bank A/c Dr 225000
To 13% Debenture Application
and Allotment A/c 225000
13% Debenture Application
and Allotment A/c Dr 225000
To 13% Debentures A/c 225000
(b) Bank A/c Dr 225000
To 13% Debenture Application
and Allotment A/c 225000
13% Debenture Application
and Allotment A/c Dr 225000
Profit and Loss A/c Dr 90000
To 13% Debentures A/c 225000
To Premium on Redemption
of Debentures A/c 90000
(c) Bank A/c Dr 225000
To 13% Debenture Application
and Allotment A/c 225000
13% Debenture Application
and Allotment A/c Dr 225000
Loss on issue of Debentures A/c Dr 90000
To 13% Debentures A/c 225000
To Premium on Redemption
of Debentures A/c 90000
(d) None of the above
Answer
Answer: (c) Bank A/c Dr 225000
To 13% Debenture Application
and Allotment A/c 225000
13% Debenture Application
and Allotment A/c Dr 225000
Loss on issue of Debentures A/c Dr 90000
To 13% Debentures A/c 225000
To Premium on Redemption
of Debentures A/c 90000
Explanation: Entry for Application money received:
Bank A/c Dr 225000
To 13% Debenture Application
and Allotment A/c 225000
( 15000 X 15 )
Entry for transferring application money to 13 % Debentures account:
13% Debenture Application
and Allotment A/c Dr 225000
Loss on issue of Debentures A/c Dr 90000
( 15000 X (40/100) x 15 )
To 13 % Debentures A/c 225000
To Premium on Redemption
of Debentures A/c 90000
Issue and Redemption of Debentures Class 12 MCQ
21.K Ltd issued 1000, 17 % Debentures of Rs 30 each at a discount of 8 % redeemable at par at any time after 8 Years. Journal entries in the books to record issue will be:
(a) Bank A/c Dr 27600
To Debenture Application
and Allotment A/c 27600
Debenture Application
and Allotment A/c Dr 27600
To 17 % Debentures A/c 27600
(b) Bank A/c Dr 27600
To Debenture Application
and Allotment A/c 27600
Debenture Application
and Allotment A/c Dr 27600
Discount on issue
of Debentures A/c Dr 2400
To 17 % Debentures A/c 30000
(c) Bank A/c Dr 27600
To Debenture Application
and Allotment A/c 27600
Debenture Application
and Allotment A/c Dr 27600
Profit and Loss A/c Dr 2400
To 17 % Debentures A/c 30000
(d) None of the above
Answer
Answer: (b) Bank A/c Dr 27600
To Debenture Application
and Allotment A/c 27600
Debenture Application
and Allotment A/c Dr 27600
Discount on issue
of Debentures A/c Dr 2400
To 17 % Debentures A/c 30000
Explanation: Amount of discount per Debenture = 30 X (8/100) = Rs. 2.4
Entry for Application money received
Bank A/c Dr 27600
To 17 % Debenture Application
and Allotment A/c 27600
[ 1000 X ( 30 – 2.4 )]
Entry for transferring application money to 17 % Debentures account
17 % Debenture Application
and Allotment A/c Dr 27600
Discount on issue
of Debentures A/c Dr 2400
( 1000 X 2.4 )
To 17 % Debentures A/c 30000
22.KD Ltd issued 1000, 13 % Debentures of Rs 30 each at a discount of 20 % redeemable at a premium of 30 %. Journal entries in the books of. Entries in the books for issue of Debentures will be: KD Ltd will be:
(a) Bank A/c Dr 24000
To Debenture Application
and Allotment A/c 24000
Debenture Application
and Allotment A/c Dr 24000
To 13 % Debentures A/c 24000
(b) Bank A/c Dr 24000
To Debenture Application
and Allotment A/c 24000
Debenture Application
and Allotment A/c Dr 24000
Profit and Loss A/c Dr 15000
To 13 % Debentures A/c 30000
To Premium on Redemption
of Debenture A/c 9000
(c) Bank A/c Dr 24000
To Debenture Application
and Allotment A/c 24000
Debenture Application
and Allotment A/c Dr 24000
Loss on issue of Debenture A/c Dr 15000
To 13 % Debentures A/c 30000
To Premium on Redemption
of Debenture A/c 9000
(d) None of the above
Answer
Answer: (c) Bank A/c Dr 24000
To Debenture Application
and Allotment A/c 24000
Debenture Application
and Allotment A/c Dr 24000
Loss on issue of Debenture A/c Dr 15000
To 13 % Debentures A/c 30000
To Premium on Redemption
of Debenture A/c 9000
Explanation: Amount of discount per Debenture = 30 X (20/100) = 6
Amount of premium per Debenture = 30 X (30/100) = 9
Total loss on issue = 6 + 9
= 15
Entry for Application money received
Bank A/c Dr 24000
To Debenture Application
and Allotment A/c 24000
[ 1000 X ( 30 – 6 )]
Entry for transferring application money to 13 % Debenture account
Debenture Application
and Allotment A/c Dr 24000
Loss on issue of Debenture A/c Dr 15000
( 1000 X 15 )
To 13 % Debentures A/c 30000
( 1000 X 30 )
To Premium on Redemption
of Debenture A/c 9000
( 1000 X 9 )
23.AB Ltd issued 18000, 13 % Debentures of Rs 50 each at a premium of 10 % redeemable at par. Journal entries in the books of AB Ltd will be:
(a) Bank A/c Dr 990000
To Debenture Application
and Allotment A/c 990000
Debenture Application
and Allotment A/c Dr 990000
To 13 % Debentures A/c 990000
(b) Bank A/c Dr 990000
To Debenture Application
and Allotment A/c 990000
Debenture Application
and Allotment A/c Dr 990000
To 13 % Debentures A/c 900000
To Profit and Loss A/c 90000
(c) Bank A/c Dr 990000
To Debenture Application
and Allotment A/c 99000
Debenture Application
and Allotment A/c Dr 990000
To 13 % Debentures A/c 900000
To Security premium Reserve A/c 90000
(d) None of these
Answer
Answer: (c) Bank A/c Dr 990000
To Debenture Application
and Allotment A/c 99000
Debenture Application
and Allotment A/c Dr 990000
To 13 % Debentures A/c 900000
To Security premium Reserve A/c 90000
Explanation: Premium per Debenture = 50 X (10/100) = Rs. 5
Entry for Application money received:
Bank A/c Dr 990000
[ 18000 X ( 50 + 5 )]
To Debenture Application
and Allotment A/c 990000
Entry for transferring application money to 13 % Debenture account
Debenture Application
and Allotment A/c Dr 990000
To 13 % Debentures A/c 900000
( 18000 X 50 )
To Security premium Reserve A/c 90000
( 18000 X 5 )
24.Gupta Ltd issued 20000, 19 % Debentures of Rs 30 each at a premium of 10 % redeemable at a premium of 20 %. Entries for issue of debentures in the books of will be: Gupta Ltd will be:
(a) Bank A/c Dr 660000
To Debenture Application
and Allotment A/c 660000
Debenture Application
and Allotment A/c Dr 660000
To 19 % Debentures A/c 660000
(b) Bank A/c Dr 660000
To Debenture Application
and Allotment A/c 660000
Debenture Application
and Allotment A/c Dr 660000
Loss on issue of Debenture A/c Dr 120000
To 19 % Debentures A/c 600000
To Security premium Reserve A/c 60000
To Premium on redemption
of Debentures A/c 120000
(c) Bank A/c Dr 660000
To Debenture Application
and Allotment A/c 660000
Debenture Application
and Allotment A/c Dr 660000
Profit and Loss A/c Dr 120000
To 19 % Debentures A/c 600000
To Profit and Loss A/c 180000
(d) None of the above
Answer
Answer: (b) Bank A/c Dr 660000
To Debenture Application
and Allotment A/c 660000
Debenture Application
and Allotment A/c Dr 660000
Loss on issue of Debenture A/c Dr 120000
To 19 % Debentures A/c 600000
To Security premium Reserve A/c 60000
To Premium on redemption
of Debentures A/c 120000
Explanation: Premium on issue of per debenture = 30 X (10/100) = 3
Premium on redemption of per Debenture = 30 X (20/100) = 6
Entry for Application money received
Bank A/c Dr 660000
[ 20000 X ( 30 + 3 )]
To Debenture Application
and Allotment A/c 660000
Entry for transferring application money to 19 % Debentures account
Debenture Application
and Allotment A/c Dr 660000
Loss on issue of Debenture A/c Dr 120000
( 20000 X 6 )
To 19 % Debentures A/c 600000
( 20000 X 30 )
To Security premium Reserve A/c 60000
( 20000 X 3 )
To Premium on redemption
of Debentures A/c 120000
( 20000 X 6 )
Issue and Redemption of Debentures Class 12 MCQ
25.Anjana Ltd has 20000, 8 % Debenture of Rs 10 each which are outstanding on 1st April 2014, and are due for redemption on 31st March 2015. The company has a Debenture redemption reserve of Rs 48000 on that date. The amount transferred to Debenture redemption reserve will be:
(a) Rs. 2000
(b) Rs. 50000
(c) Rs. 20000
(d) None of the above
Answer
Answer: (a) Rs. 2000
Explanation: Total value of Debentures to be redeemed = 20000 X 10
= Rs. 200000
Required amount of Debenture redemption reserve as per section 71(4) of the companies Act 2013 = 25% of the value of Debentures to be redeemed
= (25/100) X 200000
= Rs. 50000
Less: Opening Debenture redemption reserve already in the books of accounts = Rs. 48000
Required amount of Debenture redemption reserve (DRR) = Rs. 2000
26.ABC Ltd has 14000, 8 % Debentures of Rs 60 each which are outstanding on 1st April 2014, and due for redemption on 31st March 2015. The company has a Debenture redemption reserve of Rs 45000 on that date. The necessary journal entry for transferring profit to Debenture redemption reserve will be:
(a) Surplus i.e. Balance in statement
of Profit and Loss A/c Dr 165000
To Debenture redemption
Reserve A/c 165000
(b) Surplus i.e. Balance in statement
of Profit and Loss A/c Dr 210000
To Debenture redemption
Reserve A/c 210000
(c) Surplus i.e. Balance in statement
of Profit and Loss A/c Dr 45000
To Debenture redemption
Reserve A/c 45000
(d) None of the above
Answer
Answer: (a) Surplus i.e. Balance in statement
of Profit and Loss A/c Dr 165000
To Debenture redemption
Reserve A/c 165000
Explanation: Total value of Debentures to be redeemed = 14000 X 60
= Rs. 840000
Required amount of Debenture redemption reserve as per section 71(4) of the companies Act 2013 = 25% of the value of Debentures to be redeemed
= (25/100) X 840000
Required amount of Debenture redemption reserve
= Rs. 210000
Less: Opening Debenture redemption reserve already in the books of accounts
= Rs. 45000
Required amount of Debenture redemption reserve (DRR)
= Rs. 165000
Entry for required profit to be transferred to Debenture redemption reserve account
Surplus i.e. Balance in statement
of Profit and Loss A/c Dr 165000
To Debenture redemption
Reserve A/c 165000
27.JJ Ltd has 15000 10 % Debentures of Rs 10 each, Which are outstanding on 1st April 2016, due for redemption on 31st March 2017. The amount of investment required in specified securities will be:
(a) Rs. 150000
(b) Rs. 15000
(c) Rs. 22500
(d) None of the above
Answer
Answer: (c) Rs. 22500
Explanation: Total value of Debentures to be redeemed = 15000 X 10
= Rs. 150000
As per section 71(4) of companies Act 2013 every company required to created DRR is also required to invest or deposit in specified securities by 30th April a sum which is at least equal to 15% of the amount of Debentures maturing for payment during the year ending 31st March of the next year.
Total amount required to invest in specified securities = Value of Debentures to be redeemed X (15/100)
= 150000 X (15/100)
= Rs. 22500
28.Green Ltd has 14000 8 % Debentures of Rs 30 each, which are outstanding on 1st April 2016, due for redemption on 31st March 2017. The amount of investment required in specified securities will be:
(a) Rs. 420000
(b) Rs. 14000
(c) Rs. 63000
(d) None of the above
Answer
Answer: (c) Rs. 63000
Explanation: Total value of Debentures to be redeemed = 14000 X 30
= Rs. 420000
As per section 71(4) of companies Act 2013 every company required to created DRR is also required to invest or deposit in specified securities by 30th April a sum which is at least equal to 15% of the amount of Debentures maturing for payment during the year ending 31st March of the next year.
Total amount required to invest in specified securities = Value of Debentures to be redeemed X (15/100)
= 420000 X (15/100)
= Rs. 63000
29.On 1st Jan 2016, BC Ltd Purchased 500, 19 % own Debentures of Rs 25 each for immediate cancellation@ 22 per Debenture and payment of the brokerage @ 2 %. Journal entry for cancellation of own Debenture will be:
(a) 19 % Debentures A/c Dr 12500
To Own Debentures A/c 11220
To Gain/Profit on cancellation
of own Debenture A/c 1280
(b) 19 % Debentures A/c Dr 12500
To Own Debentures A/c 10600
To Gain/Profit on cancellation
of own Debenture A/c 1900
(c) 19 % Debentures A/c Dr 12500
To Own Debentures A/c 9700
To Gain/Profit on cancellation
of own Debenture A/c 2800
(d) None of the above
Answer
Answer: (a) 19 % Debentures A/c Dr 12500
To Own Debentures A/c 11220
To Gain/Profit on cancellation
of own Debenture A/c 1280
Explanation: profit on purchase of each own Debenture = Price of per Debenture (-) Purchase price of per Debenture
= 25 (-) 22
= Rs. 3
Total profit on purchase of Debenture = Total Debenture purchased X profit on purchase of each own Debenture
= 500 X 3
= Rs. 1500
Less: Brokerage paid = Rs. 220
Total gain = Rs. 1280
Total price paid for purchase of Debenture = Total Debenture purchased X Price paid for purchase + Purchase cost incurred if any
( 500 X 22 ) + ( 500 X 22 ) X (2/100)
= 11000 + 220
= Rs. 11220
Entry for purchase of own Debentures
19 % Debentures A/c Dr 12500
To Own Debentures A/c 11220
To Gain/Profit on cancellation
of own Debenture A/c 1280