Most Important Previous Year Questions of Issue of Debentures of Class 12th

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Practicing the Previous Year Questions of Issue of Debentures of Class 12th is necessary to improve your marks in class 12 board exams. We have provided the Most Important Issue Of Debentures PYQs of Class 12 in this article prepared by the experts. Our practice Previous year’s questions with solutions are organized in a methodical manner to help you easily master the test pattern. Each solution contains a step-by-step explanation to help you grasp the important concept behind the question. Please review these Debentures chapter’s questions with solutions after revising the theory.

Most Important Previous Year Questions of Issue of Debentures of Class 12th

Accounts students can boost their Board exam preparation using the Issue Of Debentures Class 12 PYQs exercise. You will learn how to properly mark questions, determine their difficulty level, and allocate time by practicing Class 12 Previous Year Questions of Issue of Debentures. At Adda247, you may get PYQs pdf on Class 12 Debenture Issue and Redemption, as well as solutions. You can comment if you want PYQ solutions of other chapters.

Class 12th Previous Year Questions of Issue of Debentures

Now have a look at the Class 12th Important Previous Year Questions of Issue of Debentures with solution in the below section –

1 Mark Questions

Q1. Give the meaning of ‘Debenture’.

Q2. Excess of issue price of a debenture over its face value is called __________

Q3. Garvit Ltd. Invited applications for issuing 3,000, 11% Debentures of ₹100 each at a discount of 6%. The full amount was payable on application. Applications were received for 3,600 debentures. Application for 600 debentures were rejected and the application money was refunded. Debentures were allotted to the remaining applicants. Pass the necessary journal entries for the above transaction in the books of Garvit Ltd.

Q4. For recording the issue of debentures as a collateral security by a journal entry _________ account is debited.

Q5. Give the meaning of ‘Debentures issued as Collateral Security’.

3/4 Mark Questions

Q6. Since Ltd. purchased assets of the book value of ₹1,98,000 from Dixon Ltd. It was agreed that the purchase consideration be paid by issuing 10% debentures of ₹100 each.

Record the necessary journal entries in the books of Sinco Ltd. Assuming that the debentures have been issued:

(i) At a discount of 10%

(ii) At a premium of 10%.

Q7. Amay Ltd. invited applications for issuing 10,000, 8% debentures of ₹100 each. The amount was payable as follows:

₹30 on application and ₹70 on allotment. The public applied for 12,000 debentures. Applications for 8,000 debentures were accepted in full; applications for 3,000 debentures were allotted 2,000 debentures and the remaining applications were rejected. All money was duly received.

Pass the necessary journal entries in the books of the company for the above transactions.

Q8. Zed Ltd. issued 2,00,000, 8% debentures of ₹100 each at a discount of 6% redeemable at a premium of 10% after 5 years. The amount was payable as follows:

On application – ₹50 per debenture and

On allotment – balance

Record the necessary journal entries for the issue of debentures in the books of Zed Ltd.

Q9. KTR Ltd., issued 365, 9% Debentures of ₹1,000 each on 4-3-2016. Pass necessary Journal entries for the issue of debentures in the following situations:

(a) When debentures were issued at par redeemable at a premium of 10%.

(b) When debentures were issued at 6% discount redeemable at 5% premium.

Q10. On 2.3.2016, L and B Ltd. Issued 635, 9% debentures of ₹500 each in the following situations:

(a) When Debentures were issued at 5% discount, redeemable at 10% premium.

(b) When Debentures were issued at 12% premium, redeemable at 6% premium.

Q11. X Ltd. purchased assets of ₹18,00,000 and took over liabilities of ₹6,00,000 of Y Ltd. for a purchase consideration of ₹10,00,000. The payment to Y Ltd. Was made by issue of 9% debentures of ₹100 each at ₹125.

Calculate the number of 9% debentures issued in favour of Y Ltd. and pass the necessary journal entries for the above transactions in the books of X Ltd.

Q12. (i) Anand Ltd. purchased machinery worth ₹3,15,000 from Mahima Ltd. The payment was made by issue of 10% debentures of ₹100 each issued at a discount of 10%.

Pass the necessary journal entries for purchase of machinery and issue of debentures in the books of Anand Ltd.

(ii) Manas Ltd. issued 10,000, 7% debentures of ₹100 each at a premium of 10% redeemable at a premium of 10% after 6 years.

Pass the necessary journal entries in the books of Manas Ltd. regarding issue of debentures.

Q13. (i) Vayee Ltd. purchased the following assets of E.X. Ltd.:

Land and Building of ₹60,00,000 at ₹84,00,000; Plant and Machinery of ₹40,00,000 at ₹36,00,000. The purchase consideration was ₹1,10,00,000. Payment was made by accepting a Bill of Exchange in favour of E.X. Ltd. of ₹20,00,000 and remaining by issue of 8% debentures of ₹100 each at a premium of 20%.

Record the necessary journal entries for the above transactions in the books of Vayee Ltd.

5/6 Mark Questions

Q14. Pass necessary journal entries for the issue of debentures in the following cases:

(i) Issued 5,000 debentures, 9% debentures of ₹100 each at a discount of 10% redeemable at a premium of 5% after 5 years

(ii) Issued 30,000 debentures, 12% debentures of ₹100 each at a premium of 5% redeemable at par after 5 years.

(iii) Issued 8,750 debentures, 12% debentures of ₹100 each at par, redeemable at par after 5 years.

Q15. Pass journal entries relating to issue of debentures for the following transactions:

(a) Issued 8,000, 10% debentures of ₹100 each at a discount of 10%, redeemable at 5% premium.

(b) Issued 4,000, 12% debentures of ₹100 each at 10% premium, redeemable at 6% premium.

(d) Issued ₹5,00,000, 9% debentures of ₹100 each at 10% premium redeemable at par.

(e) Issued 6,000, 9% debentures of ₹100 each at a discount of 10% redeemable at par.

Solutions

S1.

Sol. Debenture is an instrument acknowledging a debt that the company has taken, issued by a company under a common seal.

S2.

Sol. Excess of issue price over face value of debentures is called premium on issue of debentures.

S3. Journal of Garvit Ltd.

Sol.

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
(i)	Bank A/c Dr.		3,38,400
	To Debenture Application and Allotment A/c			3,38,400
	(Being application money received on 3,600 debentures)
(ii)	Debenture Application and Allotment A/c Dr.		3,38,400
	Discount/Loss on issue of Debentures A/c Dr.		18,000
	To 11% Debentures A/c			3,00,000
	To Bank A/c			56,400
	(Being application money adjusted)

S4.

Sol. For recording the issue of debentures as collateral security by a journal entry Debenture Suspense account is debited.

S5.

Sol. When a company takes a loan from bank or from other party, company may have to issue debentures as a secondary security in addition to the principal security.

S6. Journal entries

Sol.

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
(i) (a)	Sundry Assets A/c Dr.		1,78,200
	To Dixon’s Ltd. A/c			1,78,200
	(For assets purchased from Dixon Ltd.)
(i) (b)	Dixon Ltd. A/c Dr.		1,78,200
	Discount on Issue of Debentures A/c Dr.		19,800
	To 10% Debentures A/c			1,98,000
	(Allotment to debentures to Dixon Ltd. as purchase consideration)
(ii) (a)	Sundry Assets A/c Dr.		2,17,800
	To Dixon’s Ltd. A/c			2,17,800
	(For assets purchased from Dixon Ltd.)
(ii) (b)	Dixon Ltd. A/c Dr.		2,17,800
	To 10% Debentures A/c			1,98,000
	To Securities Premium Reserve A/c			19,800
	(Allotment of 1980 Debentures of ₹100 each at a premium of 10% as purchase consideration)

S7. In the books of Amay Ltd.

Sol.

Journal Entries

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
(i)	Bank A/c Dr.		3,60,000
	To Debenture Application A/c			3,60,000
	(Application money received)
(ii)	Debenture Application A/c Dr.		3,60,000
	To 8% Debenture A/c			3,00,000
	To Debenture Allotment A/c			30,000
	To Bank A/c			30,000
	(8% Debentures issued and money refunded)
(iii)	Debenture Allotment A/c Dr.		7,00,000
	To 8% Debentures A/c			7,00,000
	(10,000 × 70)
	(Amount due to allotment)
(iv)	Bank (7,00,000 – 30,000) A/c Dr.		6,70,000
	To Debenture Allotment A/c			6,70,000
	(Money received on allotment)

Category	Debentures Applied	Debentures Allotted	Debentures Application Money (₹30)	Debentures capital (₹30)	Excess	Refund
A	8,000	8,000	2,40,000	2,40,000	–	–
B	3,000	2,000	90,000	60,000	30,000	–
C	1,000	Nil	30,000	–	–	30,000
	12,000	10,000	3,60,000	3,00,000	30,000	30,000

S8. In the books of Zed Ltd.

Sol.

Journal

Date	Particulars	L.F.	Debit Amount (₹)	Credit Amount (₹)
(i)	Bank A/c Dr.		1,00,00,000
	To Debenture Application A/c			1,00,00,000
	(Being debenture application money received)
(ii)	Debenture Application A/c Dr.		1,00,00,000
	Loss on Issue of debentures A/c Dr.		20,00,000
	To 8% Debentures A/c			1,00,00,000
	To Premium on Redemption A/c			20,00,000
	(Being debentures allotted and premium on redemption accounted for)
(iii)	Debenture Allotment A/c Dr.		88,00,000
	Discount on Issue of Debenture A/c Dr.		12,00,000
	To 8% Debentures A/c			1,00,00,000
	(Being allotment due on debentures)
(iv)	Bank A/c Dr.		88,00,000
	To Debenture Allotment A/c			88,00,000
	(Being allotment money received)

S9. Journal of KTR Ltd.

Sol.

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
4.3.2016	Bank A/c Dr.		3,65,000
Case (a)	To Debenture Application and Allotment A/c			3,65,000
	(Being Application Money Received)
4.3.2016	Debenture Application and Allotment A/c Dr.		3,65,000
Case (b)	Loss on Issue of Debentures A/c Dr.		36,500
	To 9% Debenture A/c			3,65,000
	To Premium on Redemption of Debenture A/c			36,500
	(Being issued at par, redemption at premium)
	Bank A/c Dr.		3,43,100
	To Debenture Application and Allotment A/c			3,43,100
	(Being application money received)
4.3.2016	Debenture Application and Allotment A/c Dr.		3,43,100
	Loss on Issue of Debenture A/c Dr.		40,150
	To 9% Debenture A/c			3,65,000
	To Premium on Redemption of Debenture A/c			18,250
	(Being issued at discount and redeemed at premium)

S10. Journal of L and B Ltd.

Sol.

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
2.3.2016	Bank A/c Dr.		3,01,625
Case (a)	To Debenture Application and Allotment A/c			3,01,625
	(Being Application Money Received)
	Debenture Application and Allotment A/c Dr.		3,01,625
	Loss on Issue of debentures A/c Dr.		47,625
	To 9% Debenture A/c			3,17,500
	To Premium on Redemption of Debenture A/c			31,750
	(Being debentures issued at discount redeemable at premium)
Case (b)	Bank A/c Dr.		3,55,600
	To Debenture Application and Allotment A/c			3,55,600
	(Being Application Money Received)
	Debenture Application and Allotment A/c Dr.		3,55,600
	Loss on Issue of Debenture A/c Dr.		19,050
	To 9% Debenture A/c			3,17,500
	To Premium on Redemption of Debenture A/c			19,050
	To Securities Premium Reserve A/c			38,100
	(Issue at premium Redemption at premium)

S11. Ans.

Sol. Number of debentures = Purchase considerationIssue Price=10,00,000125

= 8000 debentures

Journal

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Sundry Assets A/c Dr.		18,00,000
	To Sundry liabilities A/c			6,00,000
	To Y Ltd A/c			10,00,000
	To Capital Reserve A/c			2,00,000
	(Being assets purchased and liabilities tool over for purchase consideration of ₹10,00,000)
	Y Ltd A/c Dr.		10,00,000
	To 9% Debentures A/c (8000 × 100)			8,00,000
	To Securities Premium Reserve A/c (8,000 × 25)			2,00,000
	(Being 8000, 9% Debentures of ₹100 issued for ₹125 as payment to Y Ltd.)

S12. (i) Anand Ltd.

Sol.

Journal

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
	Machinery A/c Dr.		3,15,000
	To Mahima Ltd. A/c			3,15,000
	(Machinery purchased from Mahima Ltd.)
	Mahima Ltd. A/c Dr.		3,15,000
	Discount on issue of 10% debentures A/c Dr.		35,000
	To 10% Debentures A/c			3,50,000
	(Issue 35,000, 10% Debentures of 100 each at a discount of 10% as purchase consideration)

(ii)

Manas Ltd.

Journal

Date	Particulars	L.F.	Debit Amount (₹)	Credit Amount (₹)
	Bank A/c Dr.		11,00,000
	To 7% Debenture Application and Allotment A/c			11,00,000
	(Debenture Application money received on 10,000 Debentures)
	7% Debenture Application and Allotment A/c Dr.		11,00,000
	Loss on issue of 10% Debentures A/c Dr.		1,00,000
	To 7% Debentures A/c			10,00,000
	To Premium on Redemption of Debentures A/c			1,00,000
	To Securities Premium Reserve A/c			1,00,000
	(Debentures Application money transferred to debentures A/c)

S13. In the books of Vayee Ltd.

Sol.

Journal

Date	Particulars	L.F.	Debit Amount (₹)	Credit Amount (₹)
(i)	Land & Building A/c Dr.		84,00,000
	Plant & Machinery A/c Dr.		36,00,000
	To EX Ltd. A/c			1,10,00,000
	To Capital Reserve A/c (Bal. Fig.)			10,00,000
	(Being assets of EX Ltd. purchased)
(ii)	EX Ltd. A/c Dr.		1,10,00,000
	To Bills Payable A/c			20,00,000
	To 8% Debentures A/c (75,000 × 100)			75,00,000
	To Securities Premium Reserve A/c			15,00,000
	(75,000 × 20)
	(Being purchase consideration paid by accepting a bill and issuing 75,000 8% debentures of ₹100 each at 20% premium)

Working Notes:

Number of Debentures issued = (90,00,000/120) = 75,000 debentures

S14. Journal

Sol.

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
(i) (a)	Bank A/c Dr.		4,50,000
	To 9% Debenture Application & Allotment A/c			4,50,000
	(Receipt of application money)
(i) (b)	9% Debenture Application & Allotment A/c Dr.		4,50,000
	Loss on Issue of Debentures A/c Dr.		75,000
	To 9% Debentures A/c			5,00,000
	To Premium on Redemption of Debentures A/c			25,000
	(Allotment of debentures at a discount and redeemable at premium)
(ii) (a)	Bank A/c Dr.		31,50,000
	To 12% Debenture Application & Allotment A/c			31,50,000
	(Receipt of application money)
(ii) (b)	12% Debenture Application & Allotment A/c Dr.		31,50,000
	To 12% Debentures A/c			30,00,000
	To Securities Premium A/c			1,50,000
	(Allotment of debentures at a premium)
(iii) (a)	Bank A/c Dr.		8,75,000
	To 12% Debenture Application & Allotment A/c			8,75,000
	(Receipt of application money)
(iii) (b)	12% Debenture Application & Allotment A/c Dr.		8,75,000
	To 12% Debentures A/c			8,75,000
	(Allotment of debentures)

S15. Journal

Sol.

Date	Particulars	L.F.	Dr. (₹)	Cr. (₹)
(a) (i)	Bank A/c (8,000 × 90) Dr.		7,20,000
	To Debenture Application A/c (8,000 × 90)			7,20,000
	(Being the receipt of the application money on 8,000 debentures @ ₹ 90 per debenture)
(ii)	Debenture Application A/c Dr.		7,20,000
	Loss on issue of debenture A/c Dr.		1,20,000
	To 10% Debentures A/c (8,000 × 100)			8,00,000
	To Premium Payable on Redemption A/c			40,000
	(Being the transfer of application money on debentures allotted to the debentures account)
(b) (i)	Bank A/c (4,000 × 110) Dr.		4,40,000
	To Debenture Application A/c			4,40,000
	(Being the receipt of the application money on 4000 debentures @ ₹ 110 per debenture)
(ii)	Debentur Application A/c Dr.		4,40,000
	Loss on issue of debenture A/c Dr.		64,000
	To 12% Debentures A/c (4,000 × 100)			4,00,000
	To Premium Payable on Redemption A/c			24,000
	To Securities Premium Reserve A/c			40,000
	(Being the transfer of application money on debentures allotted to the debentures account.)
(c)	Bank A/c Dr.		1,00,000
	To Debenture Application A/c			1,00,000
	(Being the receipt of the application money on 1000 debentures @ ₹ 100 debentures @ ₹ 100 per debenture)
	Debenture Application A/c Dr.		1,00,000
	To 9% Debentures A/c			1,00,000
	(Being the transfer of application money on debentures allotted to the debentures account.)
(d)	Bank A/c Dr.		5,50,000
	To Debenture Application A/c			5,50,000
	(Being the receipt of the application money on 5,000 debentures @ ₹ 110 per debenture)
	Debenture Application A/c Dr.		5,50,000
	To 9% Debentures A/c			5,00,000
	To Securities Premium Reserve A/c			50,000
	(Being the transfer of application money on debentures allotted to the debentures account.)
(e)	Bank A/c (6,000 × 90) Dr.		5,40,000
	To Debenture Application A/c			5,40,000
	(Being the receipt of the application money on 6000 debentures @ ₹ 90 per debenture)
	Debenture Application A/c Dr.		5,40,000
	Discount on issue of debenture A/c Dr.		60,000
	To 9% Debentures A/c			6,00,000
	(Being the transfer of application money on debentures allotted to the debentures account.)