Accounts Shares, Debenture

No. of Debenture it be issued:PURCHASE PRICE
ISSUE PRICE OF Debenture
Issue of Debenture as collateral security
There are two method of Collateral Security

First method:- NO JOURNAL ENTRY PASSED (SO THERE IS NO TREATEMENT IN B/S) SECOND METHOD:--JOURNAL ENTRY PASSED I.e. Debenture Suspense a/c_____dr. shown in assets side To Debenture a/c shown in liab. side

Treatment of Collateral Security in Balance Sheet

Liabilties Assets
SECURED LOAN: - (with loan amt.) +++++ DEBENTURE SUSPENSE
DEBENTURE (with securities amt) +++++  

Issue of Debenture with terms of Redemption

In this there are six cases of Journal Entries

  1. Issue of Debenture at Par & Redeemed at Par FOR EXAMPLE:-A 10% ISSUED AT Rs.100, Repayable at Rs.100 Bank a/c ___________________dr 100 To Debenture applications a/c 100 (Being the receipt of the debenture application money) Debenture applications a/c ___________________dr. 100 To 10% Debenture a/c 100 (being the issue of debenture at par)

  2. Issue of Debenture at Premium & Redeemed at Par FOR EXAMPLE:-A 10% ISSUED AT Rs.105, Repayable at Rs.100 Bank a/c ___________________dr 105 To Debenture applications a/c 105 (Being the receipt of the debenture application money) Debenture applications a/c ___________________dr. 105 To 10% Debenture a/c 100 To Sec. Prem. a/c 05 (Being the issue of debenture at 5% premium)

  3. Issue of Debenture at Discount & Redeemed at Par FOR EXAMPLE:-A 10% ISSUED AT Rs.95, Repayable at Rs.100 Bank a/c ___________________dr 95 To Debenture applications a/c 95 (Being the receipt of the debenture application money) Debenture applications a/c ________________dr 95 Discount on issue of Debenture a/c ______________dr 05 To 10% Debenture a/c 100 (Being the issue of debenture at 5% discount)

  4. Issue of Debenture at Par but Redeemed at Premium FOR EXAMPLE:-A 10% ISSUED AT Rs.100,Repayable at Rs.110 Bank a/c ___________________dr 100 To Debenture applications a/c 100 (Being the receipt of the debenture application money) Debenture applications a/c___________________dr 100 Loss on issue of Debenture a/c (B/f)___________________dr 10 To 10% Debenture a/c 100 To Prem. On Redemption a/c 10 (Being the issue of debenture, redeemed at 10% prem.)

  5. Issue of Debenture at Premium & Redeemed at Premium FOR EXAMPLE:-A 10%DEBENTURE ISSUED AT Rs.105, Repayable at Rs.110 Bank a/c ___________________dr 105 To Debenture applications a/c 105 Debenture applications a/c___________________dr 105 Loss on issue of Debenture a/c ___________________dr 10 To 10% Debenture a/c 100 To Prem. On Redemption a/c 10 To Sec. Prem.a/c 05 (Being the issue of debenture, redeemed at 10% prem.)

  6. Issue of Debenture at Discount but Redeemed at Premium FOR EXAMPLE:-A 10% ISSUED AT Rs.95, Repayable at Rs.110 Bank a/c_________________________dr 95 To Debenture applications a/c 95 (Being the receipt of the debenture application money) Debenture applications a/c___________________dr 95 Loss on issue of Debenture a/c ___________________dr 10 Discount on issue of Debenture a/c ___________________dr 05 To 10% Debenture a/c 100 To Prem. On Redemption a/c 10

(Being the issue of debenture, redeemed at 10% prem.)

Q. DIFF.B/W Debentureholder & Shareholder

Q. Treatment of Collateral Security in Balance Sheet

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