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Debentures issued as collateral security...

Debentures issued as collateral security will be debited to :

A

Bank Account

B

Debentures Suspense Account

C

Debentures Account

D

Bank Loan Account

Text Solution

Verified by Experts

The correct Answer is:
B
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During the year ended 31st March, 2019, Anderson Ltd. Issued 12% Debentures of ₹ 100 each, as per the details given below: (a) 900 Debentures issued as collateral security to a bank against a losnb of ₹ 60,000. (b) The underwriters were to be paicd a commission of ₹ 48,000. 25 % of the amount was paid to them in cash and the balance was paid by the issue of Debentures at a discount of 10% to be redeemed at par. A machine was purchased for ₹ 2, 18, 500. The vendor was paid by the issue of Debentures at a premium of 15% to be redeemed ar par. 5,000 Debetures ware issued to the pubic at 5% premium , to be redeemed at premium of 5% The company wrote off all capital losses arising from the issue of Debentures at the end of the year from its capital profits and if need be from its revenue profits. You are required to Journalise the above transctions in the books of Anderson Ltd.

Fill in the blanks with appropriate words: (i) Debentures are ________ of the company. (ii) Debenture -holders are _______ of the company. (iii) Debenture Accounts is always credited with the __________ value of the debentures. (iv) Interest on debentures is paid whether the company ________ or ________ (v) An entry may or may not be passed in the Books of Accounts for Debentures issued as ________ (vi) _______ is not paid on Debentures issued as collateral security. (vii) ______ is written off in the year when debentures are issued. (viii) Discount or Loss on Issues of Debentures is written off in the year when debentures are issued first from _______ (ix) A company has Loss on Issue of Debentures of Rs 50,000. It has a balance in Securities Premium Reserve of Rs 25,000. It will debit _______ by Rs 25,000 and ______ by Rs 25,000 in the year of issue. (x) A company has issued 5,000 7% Debentures of Rs 100 each at a price at Rs 94. It will credit 7% Debentures Account by ________ (ix) A company has issued 5,000, 7% Debentures of Rs 100 each at a price of Rs 94. It will pay interset on debentures @ ________ on _______ (xii) Discount or Loss on Issues of Debentures Account will not have _______ at the year end.

Knowledge Check

  • Interest on debentures issued as a collateral security is paid on :

    A
    Nominal value of debentures
    B
    No interest is paid
    C
    Face value of debentures
    D
    Paid up value of debentures

  • Interest on Debentures issued as Collateral Security is

    A
    paid
    B
    not paid
    C
    may or may not be paid
    D
    None of these

  • Interest on Debentures issued as Collateral Security is

    A
    paid.
    B
    not paid.
    C
    may or may not be paid
    D
    None of these.

    • Similar Questions

    Explore conceptually related problems

    (i) Debentures are________ of the company. (ii) Debenture - holders are ___________ of the company. (iii) Debentues Account is always credited with the__________ value of the debentures. (iv) Interest on debentures is paid whether the company _________ or _____________. (v) An entry may or amy not be passed in the Books of Account for Debentures issued as ___________. (vi) ________ is not paid on Debentures issued as collateral security. (vii) __________ is written off in the year when debentures are issued (viii) Discount or Loss on Issue of Debentures is written off in the year when debentures are issued first from __________ . (ix) A company has loss on Issue of Debentures of Rs.50,000 . It has a balance in Securities Premium Reserve of Rs. 25,000. It Will debit_______ by Rs.25,000 and __________ by Rs.22,000 in the year of issue. (x) A company has issued 5,000 , 7% Debentures of Rs. 100 each at a price of Rs.94 . It will credit 7% Debentures Account by ____________. (xi) A company has issued 5,000 , 7% Debentures of Rs. 100 each at a price of Rs.94 . It will credit 7% Debentures @ ____________ on ____________. (xii) Discount or Loss on Issue of Debentures Account will not have __________ at the year end.

    SSS Ltd., issued 25,000, 10% Debentures of Rs. 100 each. Give Journal entries and the Balance Sheet in each of the following cases when: (i) the debentures were issued at a premium of 20%. (ii) the debentures were issued as a collateral security to Bank against a loan of Rs. 20,00,000. (iii) the debentures were issued to a supplier of machinery costing Rs. 28,00,000 as his full and final payment.

    Hyatt Ltd. Took loan of ₹ 8,00,00 from State Bank of India and issued 10,000, 9% Debentures of ₹ 100 each as collateral security. How will issure of debentures be shown in the Balance Sheet: (i) When Journal entry is not passed, and (ii) When Journal entry is passed?

    Explain with an imaginary example how issue of debentures as collateral security is shown in the Balance Sheet of a company when it is recorded in the Books of Account.

    On issue of debentures as a collateral security, which account is credicted ?

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