Conversion of Debentures Exam Based Problems and Answers

Conversion of debentures exam based problems and questions are the BEST collection of problems for sure shot success in the examination.

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PROBLEM: 5

Birgunj Sugar Ltd issued 1,000; 15% redeemable debentures of $/₹/Rs 100 each, at a discount of 10%, five year before. This year the company has decided to convert 500 redeemable debentures into ordinary shares Rs 10 each at a premium of 10% and redeem the remaining 500 debentures at par.

Pass journal entries to issue, convert and redeem of debentures.

[Answer: Discount on issue = Rs 10,000; No. of shares 4,545; Bank (b/f) = Rs 5;

Payment made to debenture holders = Rs 50,000;

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = 

PROBLEM: 6

On 1^st January 2005, Yak Company Ltd issued 800; 5%debentures of $/₹/Rs 1,000 each at Rs 950. Debenture holders have given an option to convert their holding into preference shares of Rs 100 each at a premium of Rs 25. A holder of 50 debentures notified his attention to convert his debentures into preference shares on 31^st December 2010.

Required: Journal entry for issue and conversion of debentures

[Answer: Discount on issue = Rs 40,000; No. of shares (50,000 ÷ 125) = 400]

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SHARE (ACCOUNTING FOR SHARE) http://tiny.cc/889jkz

SHARE IN Nepali  http://tiny.cc/k99jkz

DEBENTURES http://tiny.cc/yeakkz

FINAL ACCOUNT: CLASS 12  http://tiny.cc/e89jkz

FINAL ACCOUNT IN NEPALI http://tiny.cc/w89jkz

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Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = 

PROBLEM: 7

Gopal Company Ltd issued 1,500 debentures of $/₹/Rs 100 each at a discount of 10% before 10 years.  This year company has decided to convert 500 debentures into equity shares of Rs 100 each at Rs 125 and 500 debentures into new 8%debentures of Rs 100 each at 20% discount. Remaining debentures are redeemed in cash.

Give journal entries to record the above transactions of conversion and redemption.

[Answer: No. of shares = 400; No. of new debentures = 625;

Payment made to debenture holders = Rs 50,000;

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