Issue of Debentures-Accountancy-Class XII-Assignment

1)Akrosh Ltd. issued 2,000 13% debentures of Rs 100 each at a premium of 10%, redeemable at a premium of 9%. Show how the relevant items (involved in this transaction) will appear in the Company’s Balance Sheet as per the Revised Schedule VI of the Companies Act.

2)In case of shares, if there is any Calls-in-Arrears, then the company may charge interest on the arrears amount. Can the company charge interest on the arrears of a debenture holder? If yes, then at what rate interest will be charged?

3)Preet Ltd. issued 1,00,000 8% Debenture of Rs 1,000 each, payable as follows:

Date		Rs
April 1, 2010	Application	200
June 1, 2010	Allotment	500
July 1, 2010	First and Final Call	300

Mr. X who holds 100 debentures fails to pay allotment money, however he pays allotment money on first and final call. Mr. Y who holds 200 debentures paid call in advance on allotment.

Pass the necessary Journal entries.

4)ZA Ltd. took a loan of Rs 5,00,000 from ICICI Bank and issued 12% Debentures for Rs 7,00,000 as collateral security to the bank. Company also bought a machine costing Rs 10,00,000 from YB Ltd. and issued 12% Debentures of Rs 9,00,000 in full consideration of the machinery to YB Ltd.  Pass the necessary Journal entries and also show the relevant items in the Balance Sheet of the ZA Ltd. as per the Revised Schedule VI of the Companies Act.

5)Virla Ltd. wants to set-up a new manufacturing branch in Katni (a backward area) in Madhya Pradesh. The company found it beneficial to set-up the industry at this place due to the availability of cheap labour. For this purpose, it offered 1,00,000 new debentures of Rs 100 each to the general public. 

State and identify the values involved in such a decision of the company.

6)Pass the necessary Journal entries at the time of issue of Debentures for each of the following cases. (1×4)

(a) 1,200, 10% Debentures of Rs 10 each issued at a premium of 20% with term redeemable at par.

(b) 800, 12% Debentures of Rs 10 each issued with term redeemable at 20% premium.

(c) 500, 7% Debentures of Rs 20 each issued at 10% discount with term redeemable at 5% premium.

(d) 200, 14% Debentures of Rs 25 each issued at 10% premium with term redeemable at 8% premium.

7)Manish Ltd. has taken loan of Rs 20,00,000 from PNB Ltd. and Rs 15,00,000 from ICICI Bank. It has issued 25,000 10% debentures of Rs 100 each as Collateral Security to PNB and 20,000 10% debentures of Rs 100 each to ICICI against their respective loans. Pass necessary Journal Entries in books of Manish Ltd. if:

i) No entry is passed in books for issue of debenture as Collateral Security against Loan PNB Ltd.

ii) Entry is passed in books for issue of debenture as Collateral Security against Loan ICICI Bank. 

Also prepare the Company’s Balance Sheet of Manish Ltd. as per the Revised Schedule VI.

8)Pass the necessary Journal entries for each of the following cases. Also calculate the number of debentures issued in the respective cases.(3×2)

a. X Limited issued 15% Debentures of Rs 100 each at premium of 10% to Y Limited for the purchase of machinery costing Rs 100,000.

b. X Limited issued 14% Debentures of Rs 100 each at 10% discount to Y Limited in consideration of purchase of plant costing Rs 1,00,000

c. P Limited purchased business of Q Limited for Rs 14,00,000. Business purchase consisting assets Rs 14,00,000 and liabilities Rs 3,00,000. 60% of the purchase consideration was settled through bank draft and the balance amount was paid by issuing 16% Debentures of Rs 100 each at 40% premium.