Company AccountsQ-1 | Issue of DebenturesQuestion 4907 of 112
All Questions

On 1st April 2023, Globex Ltd. took over assets of ₹ 9,00,000 and liabilities of 1,20,000 of Himalayan Ltd. for the purchase consideration of 8,80,000. It paid the purchase consideration by issuing 8% debenture of 100 each at 10% premium on same date. XY Ltd. issued another 6000, 8% debenture of 100 at discount of 10% redeemable at premium of 5% after 5 years. According to the terms of the issue 30 is payable on application and the balance on the allotment on debentures. It has been decided to write off the entire loss on issue of discount in the current year itself. You are required to pass the journal entries in the books of XY Ltd. for the financial year 2023-24. [RTP Jan. 2025]

Options

A
B
C
D
For any discrepancies in this question, email contact@cadada.in

Correct Answer

✅ Option — Correct Option

All Options:

  • A
  • B
  • C
  • D

Detailed Solution & Explanation

In the books of XY Ltd. Journal Entries Date Particulars L.F. Amount (Dr.) Amount (Cr.) 2023 April Sundry Assets A/ c Dr. Goodwill A/ c (Bal. fig.) Dr. To Himalayan Ltd. A/ c To Sundry Liabilities A/ c (Assets and liabilities taken over for a net consideration of 8,80,000) 9,00,000 1,00,000 8,80,000 1,20,000 Himalayan Ltd. A/ c Dr. To 8% Debentures A/ c To Securities Premium A/ c 8,80,000 8,00,000 80,000 (8000; 8% Debenture of 100 each issued at a premium of 10%) Bank A/c Dr. To Debenture Application A/ c (Application money received for 6000, 8% Debenture) 1,80,000 1,80,000 Debenture Application A/ c Dr. To 8% Debenture A/ c (6000; 8% Debenture allotted) 1,80,000 1,80,000 Debentures allotment A/ c Dr. Loss on issue of debenture A/ c Dr. To 8% Debentures A/ c To Premium on redemption of debentures A/ c (Allotment money due on 6000; 8% Debentures at 10% discount and redeemable at 5% premium) 3,60,000 90,000 4,20,000 30,000 Bank A/c Dr. To Debentures Allotment A/ c (Allotment money received) 3,60,000 3,60,000 Profit and Loss A/ c Dr. To Loss on issue of Debenture A/ c (Loss on issue of debenture written off) 90,000 90,000 UNIT – 4 (Accounting for Bonus Issue and Right Issue) DESCRIPTIVE QUESTIONS

Key Concepts to Understand

Consideration

Something of value exchanged for a promise. 'Quid Pro Quo' (Something for something).

More Questions from Company Accounts

Reserve Capital

Cumulative preference shares

Minimum subscription

Reserve Capital and Capital Reserve carry the same meaning.

As per Table F, the Minimum rate of interest that can be charged on calls- in-Arrear and that can be allowed on calls-in-advance are 10% p.m. and 12% p.m. respectively.

Re-issue of forfeited shares is allotment of shares but not a sale. [May 2018, 2 Marks]

Ready to Master Company Accounts?

Practice all 112 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.

Start Practicing — It's Free